Sedans are positioned to hold their values well in the coming years since demand should stay consistent to current levels, but supply will decline from current levels. Image via Pixabay.
4 Remarketing Trends to Watch
The remarketing industry is constantly changing and the number of things that remarketers need to stay on top of is constantly growing. Here are four trends in remarketing that remarketers should have on their mind.
1. The Movement Away from Seasonality
There’s been a longstanding pronounced seasonality to fleet purchases and fleet remarketing. Many fleets purchase vehicles around the same time of the year and, when the time comes, remarket those vehicles at consistent points of the year.
In the past few years historical trends have begun to change within the industry.
This has been the third year in a row where the summer season has seen stronger auction sales and wholesale values than what was historically expected of the season. The spring tax season has also been starting later in the year.
“You’re starting to see remarketing have much more potential than aiming to dispose the majority of your vehicles in the spring to coincide with tax refund season,” said Jonathan Smoke, chief economist at Cox Automotive. “The reality is we’re seeing spring and summer become very similar in terms of total amount of demand.”
As a result, Smoke added, remarketers are beginning to realize that there’s a longer market and more opportunity to remarket vehicles.
2. More Content in the Average Used Vehicle
The content in the average used vehicle is also now better than it has ever been. Features like Bluetooth, Apple CarPlay, and even safety tech such as front collision avoidance, are coming in standard trim levels in the vehicles returning to market in recent years.
As a result of vehicles coming equipped with more content, the average wholesale value of these vehicles is rising when they return to market, according to Smoke.
3. The Type of Vehicles Returning to the Used Market
Residuals for vehicles such as SUVs and crossovers are holding strong right now, but that may change soon. Wholesale values of certain crossover segments are already beginning to decline as supply outpaces demand.
This issue will only be exacerbated in the next couple of years, as even more of these crossovers return to market.
Keeping a diversified mix of vehicles in your fleet will put you in a better position to absorb any depreciation hits that may result from this.
Sedans are positioned to hold their values well in the coming years since demand should stay consistent to current levels, but supply will decline from current levels.
4. Advances in Remarketing Technology
Like many other industries, data and analytics are becoming more and more important to remarketing.
One area where the industry currently struggles is in deciphering VIN specific valuations.
In many cases its difficult to decode a VIN to determine whether a vehicle is a base trim, mid-level trim, or high-end trim. The type of return a remarketer can expect to see on a certain trim can be vastly different based on the trim and the content within that trim, so this is a big issue that better data valuation systems can solve.
“It’s not just ‘here is a Toyota Camry,’” said Anil Goyal, EVP of operations at Black Book. “You need to know content to really value it. Not every trim and not every option retains value. It’s important to realize that even though the market is doing well, there are nuances when you get to VIN specific details.”
Systems are being worked on to be able to better decipher trim levels from a VIN.
Source: https://www.automotive-fleet.com
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Graph 1: fleet management activities
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I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.
