Automotive Blog

From making cars to managing the vehicle asset cycle

Winding Road

Image:  Winding Road

In many mature markets, new car ownership is slowly being replaced by leasing and other forms of use. Where this trend leads us to in a decade or so remains a matter of debate, and predications range from zero ownership scenarios to more conservative forecasts of ever greater share of leasing, driven by affordability of finance. Regardless of which vision proves more correct, (or least wrong!), the growth of manufacturer owned and independent rental and leasing fleets is already pushing used car remarketing up the agenda.

One European volume carmaker has been looking at new ways of leasing fleets across the vehicle lifecycle, so integrating new car with used car leasing offers. In doing so, the sales and marketing team have considered giving customers the option to move from new car to new car after two years, and offering a similar two year replacement interval for those customers preferring older cars. One major daily rental company is already offering rent to buy options for retail customers, so integrating the fleet remarketing and customer offer. 

At present, best practice remarketing involves cutting the time from de-fleet to resale, increasing competition and expertise in fleet condition management, vehicle processing, and innovative wholesale and retail channels.  Centralised inventory and process management is also helping carmakers and leasing companies to improve the availability of cars, prioritisation of refurbishment, and the management of stock and release of cars for resale. A balance is required between faster throughput time and delivery of enhanced residual and resale prices. 

Several carmakers, already managing more of their own remarketing channels through to dealer and customer, are looking at the possibilities of de-fleet to order. Auctions and online channels are the main mechanisms of maintaining the liquidity of mature used car markets today, but carmakers, leasing companies and auction providers are all looking at innovative use of data to open up the customer renewal and car lifecycle pipeline. For example, the pricing and targeting of offers to new and used car customers can be synchronised, through matching of suitable switching points and available cars.  Technology will help, as telematics brings connected customers and cars; live car data and closer interaction with customers will enrichen the picture and enable offers to be targeted more effectively.  

In the past, new cars were designed, built and sold by carmakers and then, it can be argued, largely forgotten. Remarketing combined with leasing, customer account management and technology, will ease carmakers further towards fleet management and squeezing all available revenue from the vehicle over the asset lifecycle.  Pushing both new and used cars into the wholesale market will become even more questionable if this undermines the return on assets over the long term, and managing used vehicle flows will therefore become a key skill in extending the production line out of the factory and into the circulating parc. Looking at the asset base and financial liabilities of carmakers, it is clear that for some brands, more funds are now tied up in cars on the road than in production and development cycles. Whether all carmakers are willing and able to make a shift from maker to service provider remains an open question, but if carmakers back away from this role, then independent third parties such as the leasing and rental companies, or even new mobility providers, may instead fill the gap.

This blog summarises some of the issues raised in a new management briefing on used car remarketing, which is now available for members to download. Please see HERE for more details.


Written by Ben Waller

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