It is one of the mantras of fleet management: selling out-of-service vehicles to employees will lower depreciation costs, provide a benefit to the buyer, and ultimately make the fleet more cost efficient.
Often, though, once a method of pricing has been established, the employee sales process becomes an afterthought, and opportunities to actually market these vehicles are missed. There are some basic do’s and don’ts to effectively sell fleet vehicles to employees, and fleet managers who recognize them can reap the benefits.
Not Just Sales It’s been said that fleet management is essentially the creation of a product: a used vehicle. While this observation may be an over-simplification, there is at least some truth to it and, as with any product, used vehicles must be properly marketed to command the best price.
A number of the “do’s” of employee sales involve creating and marketing a top product: Used-vehicle values are based primarily upon age, mileage, equipment, and condition. Within the ability of a vehicle to perform the corporate mission, the replacement policy, specification, and proper maintenance should all be considered in creating corporate fleet policy.
- Start before the vehicle is first put into service:
- Manage the “production” process carefully:
A used vehicle is “produced” during its term in service. Mileage, age, and condition should be monitored regularly. Condition reports should be required at least quarterly, completed by the driver and approved by a supervisor. A process should be in place to address the damage and mechanical conditions shown on the reports.
- Replace vehicles on time:
Don’t let vehicles run beyond your replacement criteria.
- Be careful with reconditioning:
Unless you have a means to sell vehicles at full retail value, reconditioning beyond basic cleanup or normal physical wear and tear seldom, if ever, returns the full value of the money spent. If you’ve managed the vehicle properly during its service term, reconditioning will seldom be necessary.
- Market vehicles aggressively:
Make sure that the greatest number of people as possible in the company know that a vehicle is available and what the price is.
- Make buying simple and easy:
Have all your “ducks in a row” - paperwork, title, and vehicle maintenance and repair records should be available to interested buyers. Have ancillary programs available as well. Marketing used vehicles, rather than just selling them, will increase sales at higher prices and still provide a much-prized benefit to employees.
Some Marketing Tips
Assuming vehicles have been equipped properly, well maintained during service life, and replaced on schedule, you can aggressively market them to your employees (not just to drivers) in several ways.
Your drivers, of course, are the greatest potential market. Drivers know the vehicles, their condition, and maintenance histories. Most direct selling price inquiries will come from drivers. However, many fleets make the mistake of waiting until asked to provide pricing. For every vehicle coming out of service, fleet managers should provide a formal price quote to the driver, whether or not the driver requests one. Drivers who weren’t initially interested may be swayed upon seeing the price. The price quote should be non-negotiable and encourage the driver to notify other potential buyers that the vehicle is available. Drivers should have right of first refusal, followed by a first-come, first-served sales process. Use company Intranet sites to actively advertise available vehicles.
Two ancillary programs that help sell vehicles are financing and extended warranty. Used-vehicle financing can usually be offered through your lessor or the manufacturer, as well as through independent lenders and banks. Manufacturers also offer extended warranties.
Pricing is the most critical part of a strong employee sales program. Offer fleet vehicles at a price lower than employees can obtain themselves, but higher than offered at auction. Know and understand both markets: the amount you get from the wholesale market, as well as the price an identical or similar vehicle commands in the retail market.
If your company permits drivers to purchase upgraded equipment when the vehicle is ordered, a policy should be in place to address how equipment value is handled. If equipment enhances the vehicle’s value and the driver is interested, don’t add that value to the price. If another employee or third party is interested, that value should be factored into the price. The driver should have no financial interest in equipment purchased unless he or she buys the vehicle.
Work closely with your lessor, if your vehicles are leased. As the titled owners, lessor cooperation is needed in obtaining paperwork such as titles and bills of sale.
Keep close tabs on vehicle condition throughout service life and at turn-in. When vehicles are transferred from one driver to another, get a condition report from both, compare the reports, and investigate any discrepancies. Upon turn-in, get a final driver report as well.
Some Don’ts to Live By
There are clear “don’ts” to maximizing employee sales: allow your vehicles to miss scheduled maintenance. Remember, you are producing a used-vehicle product.
wait to be asked for a price quote. Preparing a formal quote is part of your proactive marketing program.
- Don’t fall behind in your knowledge of all resale markets, including retail and wholesale. Remember that all quotes given will be “shopped” against local markets.
- Don’t limit used-vehicle sales efforts to your drivers. Advertise vehicles on company Web sites, and encourage drivers to make them available to family and friends.
It may seem that such a marketing program will command a great deal of work and attention in the midst of day-to-day fleet management activities. But fewer more fertile areas for savings are so readily available.