The realities of remarketing have changed, and fleets need to adapt in order to reap the rewards.
We can thank the pandemic for turning the world of remarketing on its head. Over the past few years, fleet professionals have had to throw out the old remarketing playbook and adapt to new realities.
While the pandemic may be over, some of those new realities and ways of doing business are here to stay. “While the fundamentals haven’t changed, there is one big exception,” says Eddy Cusan, VP of Commercial Sales, Openlane Canada. “And that exception is the fact that we’re now fully digital.”
Cusan says the switch to a digital platform is permanent. “We’ve had great adoption by both our sellers and our buyers, so there’s no turning back,” he explains. “We’re now a fully digital company, moving forward.”
Cusan says that at Openlane, vehicles are no longer running through the lanes. Instead, all bidders have access to an online condition report. “If people want to attend in person, they can still come,” he adds, “but I would say that attendance is minimal. I think most of our buyers have gotten very accustomed to going online.”
Reconditioning in 2023
Supply chain issues over the past few years have created a demand for used cars that many fleet managers were happy to take advantage of. Cusan says that due to this increased demand, reconditioning vehicles prior to remarketing wasn’t a priority. Now, that’s all starting to change.
“We’re starting to see a softening,” he says, speaking of the used car market and used car prices. “And sellers are starting to realize that in order to maximize the proceeds from their vehicles, they do have to get back to looking at what needs to be reconditioned.”
He’s not saying that reconditioning wasn’t necessary during the pandemic. Rather, the focus has shifted. “There was still a lot of reconditioning going on,” he explains, “but primarily it was about safety concerns.”
In other words, vehicles were reconditioned in order to make sure they were roadworthy and safe. Now, in order to get top dollar for a vehicle, fleets have to look at cosmetic issues as well. “They’re asking themselves what they need to do in order to make sure buyers are going to be attracted to their vehicles,” Cusan adds.
The bigger picture
Jim Jackson, North American Remarketing Asset Manager at Holman recommends that fleet managers think about remarketing values long before a vehicle goes to auction.
“Condition is king in the used car world,” Jackson explains. “The better your drivers take care of that vehicle while it’s in service, the better the return you’re going to get.”
He explains that Holman addresses vehicle conditions with their clients regularly so that there are no surprises once a vehicle is ready for remarketing. “We don’t see it as much as we did in the past, but people used to smoke in their cars, and some employees treat fleet vehicles like they would a taxi,” he says. “So at the end of the year, we conduct reviews with a lot of our clients, and we talk to them about remarketing.”
He explains that fleet managers may not be able to do anything about the condition of their work trucks, especially if they’re used in extremely harsh conditions. “But the salesman-type vehicle,” he adds, “that should be well maintained, and it should be in relatively decent shape.”
A clean and properly maintained vehicle can fetch top dollar at auction, whereas a vehicle that has been abused or neglected won’t. “The difference can be thousands of dollars,” Jackson adds.
One of the best ways to ensure that your vehicles are well cared for is to offer an employee purchase program. If the driver of a vehicle knows that they might one day purchase it, chances are they’ll take better care of it.
“We’re seeing an uptick in employee sales,” Jackson says. “In today’s used car market, buying a quality vehicle can be a challenge. So if I were that salesperson, and I needed a car, I’d be crazy not to buy the vehicle I’ve been driving for the last three or four years, because I know everything about it and how well it was cared for.”
While work trucks and vans aren’t likely to be purchased by the employees who drive them, Jackson says that an employee purchase program is a great option for today’s fleets.
Employee sales will yield a higher net return, Jackson explains, because the fleet doesn’t have to pay transportation fees, auction fees, etc. “You’re looking at minimal cost and a higher return,” he adds. “So in my opinion, driver sales is the best way to go.”