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WLTP creates additional opportunities for fleet disposal profits says Aston Barclay

WLTP creates additional opportunities for fleet disposal profits says Aston Barclay

The growing demand for used cars, particularly diesels, should encourage more fleet and dealer vendors to consider refurbishing stock prior to sale to increase their disposal profits.

Aston Barclay says it has reviewed the condition grades of thousands of used cars it sold in September and October. The average value of a grade three and four car during those months was £6,429 and the difference in price was 6.99% of CAP, which equates to £449.

By investing £185 in refurbishing the grade four car to a grade three vendors would be rewarded with an average £264 uplift in price in the current market, according to the vehicle remarketing company.

Refurbishment has been a key talking point in the industry as leasing suppliers have been forced to extend contracts due to some motor manufacturers’ new car orders being affected by the introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP).

Indeed, new analysis by automotive data provider JATO Dynamics reveals that 37% of new models have yet to be homologated to WLTP standards.

That, in turn, has restricted used car volumes coming into the market, particularly in the fleet, personal contract purchase and personal contract hire sectors, as operators/owners retain existing models.

High demand, said Aston Barclay, had seen stocking days of late and low and ex-fleet used cars reduce by four days and 1.6 days respectively during September and October, while prices had increased by £287 and £447 year-on-year.

Aston Barclay believes it could be March 2019 before this WLTP-induced issue resolves itself, and in the meantime used car demand and prices were likely to remain strong.

“We have taken the average prices of the two different grades of cars and as individual models need slightly different refurbishment, but from analysing our data it is clear vendors need to consider refurbishment more seriously,” explained Martin Potter, Aston Barclay’s group operations director.

“Refurbishment isn’t relevant to every make and model, but in this buoyant used market it’s worth sitting down with your remarketing partner and doing the sums to identify the end of contract and part exchange cars where extra disposal profits are available.”