How to maximise returns when a vehicle is defleeted

All cars will lose money over their lifetime, but the amount they will lose
can vary dramatically. After a typical fleet lifecycle of three years/60,000
miles, used fleet cars can be worth anything from 60% to as little as 19% of
their original value.

As a general rule, matching low production volume with high demand is a
recipe for residual value success. High volume and low demand is a recipe for
disaster.

Some marques of car appear a safe bet when it comes to retaining their value.
As a case in point, the Honda Jazz and the Mini currently retain their value
very well, with relatively limited supplies and a high demand. Similarly, the
ever-popular Volkswagen Golf, BMW 3-series and Audi A4 have a reputation for
great residuals across the range.

By contrast, big executive saloons tend to shed a large amount of money,
because buyers don’t want to take the risk of the high running costs associated
with big cars. Other poor performers include the traditional ‘rep-mobiles’ such
as the Ford Mondeo and Vauxhall Vectra, where volume sales and front-end
discounts tend to drive down prices.

There are services available, such as residual value experts EurotaxGlass and
CAP Motor Research, which can help you work out how much a car will be worth in
three years’ time. Where once valuing a fleet would have meant a laborious
series of calculations, now services constantly monitor the value of the fleet.
These can reveal the value of a fleet at today’s and future disposal prices,
along with individual model, derivative and sector trends.

But it isn’t just choosing the right car that is important: putting the right
equipment in can also pay dividends at disposal time. On a prestige brand, the
total options bill for choosing sat nav, leather upholstery and electric sunroof
can be as high as £4,620 new. But in the used market those features retain about
£850, adding £3,770 to the cost of ownership over a typical fleet cycle.

Colour also plays a significant role in used car values. On the BMW 3
-series, eight of the 12 available colours reduce the car’s value after three
years and 60,000 miles.

Bearing all these issues in mind, which are the cars that hold the most
value? According to Glass’s Guide, the Mini retains a better residual value over
a three-year period than any other car on sale in Britain. It says that the Mini
One is predicted to retain 66% of its £10,000 new price over three years and
36,000 miles.

Other star performers are the Honda Jazz 1.4 dsi (62% of its £10,557 new
price) and the Porsche Boxster 2.7 (62% of its £32,640 price).

CAP puts the Mini in top spot, with a lower predicted RV of 52%, but over a
higher mileage of three years/60,000 miles. Other models making its top value
list include the Lexus IS diesel (£22,020), the Audi A4 Cabriolet (£25,527) and
Porsche Cayenne (£35,560), which retain 51%, while the Audi Q7 diesel (£37,077)
holds 50% of its value.

By contrast, the Suzuki Liana 1.6 GLX auto (£11,755) holds just 19% of its
new value after three years and 60,000 miles, according to CAP Monitor, while
the Citroën C5 2.0 Exclusive Auto, (£20,092), holds 20% of its value. The Ford
Mondeo Zetec 2.0 saloon retains just 22% of its £17,292 new price. Fleet
managers will be keen to avoid such financial cul-de-sacs n

John Maslen is supplements and events editor at Fleet News