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Prices fall for ex-fleet cars

In a toughening market, a car’s condition is vital to its resale value, says BCA small business specialist Simon Henstock
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10 January 2012

In a toughening market, a car’s condition is vital to its resale value, says BCA small business specialist Simon HenstockThe secondhand values of former fleet and lease cars are falling. That’s one of the main findings of BCA’s latest Pulse report.

Our report shows that values for used fleet and lease cars have fallen quite sharply, from an average of L6642 in April to L6428 in May.

A monthly drop of L214 – or 3.2 per cent – is not good news if you’re about to off-load a three- or four-year-old fleet car. However, it has wider significance because this is not just about a single monthly fall in value – this is also the latest fall in a continuing trend towards weaker used prices for fleet cars.

In January this year, the average 40-month-old fleet car was worth L6726. Since then, its value has fallen in every month apart from April, when it rose by a slender L23. It is now worth L298 less than at the start of the year.

This is not, therefore, a seasonal price adjustment but a more fundamental realigning of prices in the retail and wholesale market. Retail conditions are being reported as very tough and some commentators are forecasting that they could become even tougher before they get better.

So businesses may well find that when they off-load their fleet vehicles they don’t recoup as much as they originally expected or budgeted for.

It is important to be realistic about the price you can reasonably expect a vehicle to fetch, though. If you price it over optimistically, the car won’t sell – and you’ll be faced with continued funding costs for it and even potentially greater depreciation as it hangs around waiting for a buyer.

So set a price that reflects the current market conditions. You can also minimise the financial pain by ensuring that company vehicles are maintained properly during their time on your fleet and then presented in a smart overall condition when you come to resell them.

There will always be demand for good, clean, tidy cars with a full service history. Even when market conditions are tough, as they are now, such cars will fetch higher than the average price.

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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