Wholesale Prices Strong for Commercial Fleet Vehicles as Demand Exceeds Supply
The low inventory of used fleet vehicles in the wholesale market is causing resale prices to stay strong as dealer demand for these units remains steady, said John Rancourt, director of license/title & used vehicle remarketing for LeasePlan USA.
The key reason for the low inventory is that fleets are deferring new-vehicle acquisitions, which is resulting in fewer vehicles taken out of service for resale. “The average months in service is about 35 months with an average mileage of more than 75,000 miles,” said Rancourt. In addition, companies are tightening fleet utilization and reassigning surplus vehicles in lieu of acquiring new ones. This has likewise contributed to a lower supply of used fleet vehicles.
The weakest vehicle segment in the fleet market continues to be minivans, which are in the third year of a soft resale market. The exception is full-size cargo vans, which continue to command top dollar due to the strong demand from the secondary use market. Intermediate sedans have seen net depreciation improve as a result of the aggressive fleet incentives, which have kept stable the percentage of return at resale.
SUV resale values have increased, on average, about 10 percent. But this is compared to an extremely weak SUV market last year that was caused by excess inventory and high retail incentives on new SUVs. Despite today’s high gas prices, resale values for large SUVs remain stable and the V-8 is still the preferred engine by dealers. Pickup trucks, especially higher trim level models, have seen resale values increase by 5 percent, on average, compared to last year.
Rancourt forecasts a strong fall market. “In large measure, it will be driven by supply. So long as supply remain low, prices will remain high,” added Rancourt.