Hello Fleet Professionals.
Articles about remarketing are a hot topic these days and they should be. It's one of the most important aspects of managing your vehicle depreciation and your total fleet costs. Recently there's been more and more discussion about the actual value of what our vehicles are bringing in the aftermarket. That's also a good thing. What's not a good thing however, is that somewhere along the line, our community has forgotten that it's the market that actually sets the value of used vehicles not the guide books or the Internet. The guide books are exactly that: books that report on the sales activities at auctions for a particular period of time. They are useful "guides" for determining value, but they don't set sales prices! Look at it this way, when was the last time the Internet or a guide book wrote you a check?
Today we live in a society where we are inundated with information, and everyone is a used car expert. On the Internet I did a search on "used cars" and got 151 MILLION hits. I did a similar search for "used car price guides" and got 130 MILLION hits! So how do you judge? How do you determine if you are getting the best possible price for your used vehicle in the aftermarket? When I managed a fleet, in the days before the proliferation of the web and all this information, I learned it takes alot of effort to maximize your aftermarket returns. But it's worth it when you measure your success and see the increased value. While others were relying on their lessors and auctions to remarket their vehicles, I focused on wholesalers and brokers around the country. When I measured my results, not only was I settling on my units faster, I was netting and average of $500 more per vehicle than I did when I just "turned them in". That was on 150 vehicles sold, or for a total of $75,000. Now I know what many of you are thinking. You manage a huge fleet and $75K is a drop in the bucket. I've been hearing that for years and I think it's a cop out. If you can reduce your annual depreciation by $75K, or $50K or $100K it's still a significant reduction in your operating costs and your investment of time can be minimal if you choose the correct partner to work with you.
So how can you really tell if you are getting what your vehicles are worth? How do you measure? A lot of that is your experience. If you are running similar vehicles from year to year and following a cycle where your average mileage is similar from year to year, you can accurately benchmark how well you are doing on a year over year basis. Include in your measurement your remaining book value so you can calculate your depreciation and you'll have a real tool that you can use to measure your progress. Now many of you are thinking that your lessor is already doing that for you. Are they really? Here's a few things you need to look at. First of all is the sale price reported the net sales price for your vehicle (after all the fees) or the gross sales price? What measurement are they using to calculate your performance? Is that calculation based on the gross or the net sales price? Are they reporting a percentage of some guide book as proof of their performance and if so, what are the criteria that this percentage is based on?
As you can see there's a lot that goes into measuring your performance in remarketing. But here's the bottom line, and it seems like everyone has forgotten it: You can't judge your performance by percentages. You can only judge your performance by the net checks you get for your remarketing efforts.
Keep your chin up and let me know what you think!
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