Remarketing Fleet Vehicles
Carl Schlegel, Sales Manager - September 11, 2019
What is Remarketing?
Remarketing is the process by which businesses and fleets sell of the vehicles rotating out of use. Whether because a lease has ended, or a vehicle’s cost outweighs its usefulness, all fleets will eventually remarket their vehicles - regardless of their size. And in an ever-evolving market, vehicle remarketing can be a challenging process to navigate alone or without experience.
Thankfully, the experts at Carlease have years of industry experience in remarketing strategy and we’re here to share!
Where to start:
When vehicles come off lease one of two processes start, depending on whether it was an open-ended or closed-ended lease.
Closed-ended leases - If your business or fleet has a closed-ended lease, your vehicles are returned to the lessor, i.e. the dealership where you leased the vehicles. They are inspected for any undo wear-and-tear, and the mileage is compared to the numbers outlined in your lease terms. Once the inspection is done, the vehicles are either accepted, or your business/fleet is billed for any damage or mileage overages, and for the disposition fee. It’s important to note that you DO have the option at this point to purchase the vehicle at its residual value, but we at Carlease do not recommend this. If you purchase the vehicle, you’re under no obligation to pay for the damages, mileage overage, or the disposition fee, BUT it’s often a far costlier purchase than if you were to buy that exact same year/make/model on the open market. It doesn’t make financial sense! Remarketing a closed-ended lease presents itself as the disposition fee or the fee that the lessor charges you to clean and resell your vehicle. This fee is often unavoidable unless you lease from their establishment again, in which case they usually waive the fee. Ultimately, your role as the lesser in a closed-ended lease means you don’t have to worry about remarketing - yay!
Open-ended leases - An open-ended lease functions differently than a closed-ended lease, and the majority of businesses and fleets operate under these terms. While an open-ended lease isn’t subject to mileage restrictions like a closed-ended one is, it requires the lessee to make a balloon payment at the end of the lease terms for the difference between the residual value and the fair market value of the vehicle. This can play out in two ways. If you’re able to strategically remarket the vehicle and garner a higher payout than the residual value of the vehicle is set at, you make money. BUT if remarketing goes poorly, or isn’t a priority, you could end up paying a lot of money at the end of your lease. The moral? A strategic remarketing plan is key.
Effective Remarketing Strategies
While it may be a daunting task to think about when planning and building a fleet for your business, remarketing your vehicles should be a priority from day one, before you take possession of the vehicle.
When building or growing a fleet for your business, the obvious priority is to select vehicles that will “get the job done”. If you’re a delivery company, you’re not going to be selecting a Porsche Macan, it isn’t practical. You want to focus your efforts on vehicles that will work as hard as your business does, like a Mercedes-Benz Sprinter Cargo van. And second on the priority list is often the financial consideration of buying or leasing a vehicle. You want to save where you can, but should be willing to spend on features that will benefit your business and make your job easier. But THIRD on your priority list should be your ability to remarket the vehicles effectively when the times comes. What does this mean for your acquisition strategy? A few things:
It’s not an industry secret that most remarketed vehicles are purchased by dealerships looking to flip them as part of their used vehicle inventory, so it’s valuable to consider what dealers can market and sell - because those are the vehicles that they’re going to buy. Newer makes and models with the latest safety and tech features fare best when they come to market, everyone wants the latest and greatest. But that doesn’t mean you can’t get a good price for older makes and models too, as long as they're in good condition and well cared for. While it may seem superficial, vehicle color (interior and exterior) can make a big difference. Your company’s branding may call for a funky, unique look, but consider a vehicle wrapper rather than an overall paint job. They’re easier to remove than a lime green Sprinter van is to sell.
This also includes optional equipment! It’s important to upfit and customize your vehicle to meet your business’s needs, but be cognizant of how these features will resell. Typically speaking, the greater the number of added features, the higher the selling price - but that also means the initial price to purchase or lease the vehicles is higher as well. Thankfully, many “must-have” features are now coming standard on newer vehicles, so if you’ve leased or are planning on leasing, you can be assured that you have or you’re getting exactly what market demands.
Lastly, it’s important to take care of your vehicles. Work with your drivers to ensure that they’re respecting and maintaining the vehicles from day one. Offering incentives to drivers or gamifying the care of each vehicle can result in a well-tended fleet that resells quickly and for a higher profit. There are also many fleet management solutions on the market today that offer driver monitoring tools aimed at vehicle wear-and-tear. Monitoring and addressing quick braking or acceleration, sharp turns, speeding, and reckless driver behavior can benefit your fleet and save your business a lot of time and money. Routine maintenance shouldn't be neglected either! It's easy to ignore this critical step when your fleet is functioning fine, but wait too long and you run the risk of problems presenting themselves.
But now what? You've taken care of your leases and they're ready to go be sold...where do you remarket?
Where to Remarket - With Carlease
You have a few options when it comes to remarketing your vehicles, ranging from difficult to easy.
On Your Own - Difficult
While you’re certainly able to remarket your fleet vehicles on your own, through one of the available online platforms, or through your own dealer connections, the process can take up valuable resources and time better spent on driving your business forward. And the longer the vehicle waits to sell, the more it depreciates and the the less you'll receive for its sale. And many of the online remarketing platforms require upfront capital to list your vehicle, in addition to taking a percentage of the sale price or making you jump through hoops for a listing.
With Carlease - Easy
At Carlease, we take the guesswork out of preparing and remarketing your fleet vehicles. Thanks to our vast network of dealer partners, we are able to move vehicles quickly and efficiently and get you your payment sooner. We also specialize in working with small businesses! Larger fleet management companies who work in the remarking industry don't always have the best interests in mind for their small business clients, instilling a minimum order number or remarket number before they take you on as a client. That's not the case for Carlease. While your vehicles may be one (or a few) of thousands going up for auction at one of the larger fleet management firms, lost in a sea of other fleets looking to remarket, Carlease cares what happens to your vehicles - the more you make off of each sale, the more likely you are to work with us in the future, and the happier we are.
Call or visit Carlease.com today to talk with our leasing specialists about remarketing solutions to benefit your small business. When you're ready, we're here with answers!