AM Online

Dealer part-exchange activity hits fleet conversion rates

A strong March and April for franchised dealers has meant more part exchanges, helping to keep used stock levels high. 

Personal contract purchase deals available from manufacturers via captive finance companies have helped to create some of this stock availability. This growth in PCP is helping make new cars more affordable for a wider audience than has been the case traditionally. 

According to the Vehicle Remarketing Association, many of these cars are underwritten on two year contracts and when they appear in the used market, the demand and prices for this stock will likely be good as they fill a much needed price gap in the market between the nearly new stock and the three-to-four year old fleet stock.

A VRA spokesman said: "Dealers are keeping hold of this 'prime' stock as generally it is more varied than the stock mix coming from the fleet sector, which tends to be low emission diesels in a broadly similar specification, age, mileage and often, colour.

"As the used market’s priorities are not significantly focussed on emissions, the lower emission cars can be a challenge for the used market unless they are in excellent condition, low mileage or they have the right combination of a high specification and good colour.

"The issue of a heavily polarised mix from the fleet industry is likely to continue as drivers and employers strive to run the most CO2 and fuel efficient cars available. For asset owners it not only makes the right specification and colour of car even more critical at disposal time, but the case in which fleet mix demographics are playing a much more important role than ever going forward."

Fleet vendors have seen conversion rates fall to around 60-65% reports the VRA said.

The VRA believes values are perhaps too high to be universally sustainable and it appears that footfall is less certain and sentiment is generally poorer, so anticipates a slight softening, much more in line with 'normal' seasonality of 4-6%, and perhaps even one or two per cent more, spread over the next six months (versus nearly no seasonality last year, in particular).

The average age/mileage combination of 42 months/64,000 miles (up from 39 months and 57,000 miles three years ago) means a slightly higher proportion of ex-fleet cars are coming back in a marginally less ready-to-retail condition.

This shift, where fewer cars are ready to retail creates the current challenge for vendors to decide to refurbish when required and how much to limit spend versus likely achievable value uplift versus repair to maximise the result per car, the VRA said.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Comment as guest


Login  /  Register

Comments

No comments have been made yet.