Managing Vehicle Depreciation Using a Seasonal Remarketing Strategy
One of your top job priorities as a fleet manager is to obtain the highest resale price for each company vehicle you take out of service. An easy way to do this is by timing your vehicle replacement to coincide with seasonal highs in the used-vehicle market; in other words, remarketing vehicles when they are commanding top resale dollars.
Take Advantage of Seasonal Highs
Many new fleet managers may not realize that used-vehicle prices have seasonal highs and lows. There are certain times of the year when you will get the maximum resale dollars for a vehicle.
So what are the “hot” months for vehicle remarketing? Traditionally, the fall and spring markets are the best times to remarket your used vehicles. Resale values may increase as much as 20 percent, as opposed to selling the identical vehicles in the winter or summer. Each year, the used-vehicle market follows some fairly predictable and traditional trends, barring, of course, unforeseen circumstances such as unseasonal weather conditions or economic downturn. Here’s how a typical used-vehicle market year unfolds: The fall season (extending from mid-September to mid-to-late November) represents the market’s peak, with prices starting out strong and then gradually decreasing as the market becomes saturated with used vehicles.
The worst time to remarket vehicles is from late November to early February. Why? Many dealers (the buyers of your used-fleet vehicles) are reluctant to put additional vehicles in their inventory prior to the first of the year because they have to pay property tax on them. Also, as cold weather and the holiday season approach, the number of buyers in both the retail and wholesale markets decreases. With more inventory than buyers, wholesale prices soften as a result of the imbalance in supply and demand. As a result, dealers try not to carry a lot of inventory during the winter. (The exception is 4x4 sport/utility vehicles, which usually sell well during winter months in the Snow Belt regions of the country.)
Around mid-February (sometimes earlier, sometimes later), used-vehicle acquisitions by dealers usually begin to increase. After the winter season ends, dealers typically sell out the balance of their inventory and are once again hungry for used vehicles. That’s why the spring wholesale used-vehicle market is a strong buying time for used-vehicle dealers.
Also, keep in mind that certain categories of used ve-hicles have their own seasonal selling trends. For instance, demand for used minivans is stronger just prior to summer because this is the traditional vacation period, and many families buy used minivans at this time.
Timing Vehicle Replacement to Optimize Resale
You can control vehicle depreciation costs by simply timing vehicle replacements to take advantage of seasonal market highs and avoid seasonal lows. Avoid selling vehicles in mid-December through January because there is lower demand for used vehicles at that time. Not only do vehicles take longer to sell, but they also sell for less.
With a minimum amount of effort, you can lower depreciation costs by simply remembering that fall and spring are the best times to sell your used vehicles. Simply put, winter is not the optimal time to remarket your vehicles. But if you absolutely have to remarket your vehicles at this time at least you’ll be in keeping with the holiday spirit – you’ll be giving your vehicles away.
Let me know what you think.