SELLING FLEET VEHICLES
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THE disposal of fleet vehicles at the termina
tion of the policy period of service is a problem for any director or transport manager in charge of a sizeable fleet. Satisfactory sale of vehicles is an important factor in the ultimate cost of transport services. Although it is beyond doubt that the most simple method of selling is to deliver the vehicles to— or have them collected by—a motor auction firm, the most important criterion is that the final result should be in the best financial interest of the fleet owners: simplicity in itself is not enough.
As a director of a motor auction firm whose sole business for 38 years has been selling motor vehicles by auction, I may be forgiven for an obvious preference—prejudice, if you prefer—for disposal by auction. In my entire business life there has been an increasing acceptance by transport managers—and, of course, the motor trade and the motoring public—of selling and buying vehicles by public auction.
In the early post-war years when there was a sellers' market in new vehicles, the main problem was to obtain delivery of the new vehicles, and price and cost had to be relegated to a secondary place. Any increase in costs under these circumstances was largely offset by similar sellers' market conditions affecting the used vehicles.
In recent years tougher conditions have prevailed. The abolition of Retail Price Maintenance has put a sharp weapon in the hands of those who buy new vehicles in bulk—and I have no doubt it has been and is being used with effect. This provides fleet owners with the opportunity to buy new vehicles at advantageous terms but still leaves the problem of selling a large consignment of used vehicles to the best possible advantage. No easy problem this!
The long-established practice in the motor trade, when dealing with private motorists or business firms which operate only a few vehicles, of "trading-in" the used vehicles in part payment of new vehicles cannot readily be operated for fleet buying. The favoured terms of purchase afforded to fleet users today more or less eliminate the ordinary motor agent whose discounts could not cope with fleet owners' terms. And even if a small profit were both possible and acceptable the hazards of "trading-in" a fleet of used vehicles with so small a profit margin would call for a safe estimate of the used vehicles' values to make the deal wholly unacceptable to the fleet user.
The main distributors with their marginally higher discounts are better placed to deal with fleet business but few are willing to cope with the "trade-in" problem to endeavour to sell retail piecemeal a fleet of used vehicles. Even when finance and a retail selling organization present no problems, the most difficult problem of all is likely to raise its ugly head—space to house a fleet of used vehicles in addition to the ordinary demands upon garage space made by the day-to-day activities of retail selling to the public.
I imagine that the fleet owner with a sizeable number of vehicles has long since given up the hope that he can buy at advantageous terms and still trade-in the used vehicles at an equally satisfactory price level.
The problem of selling the fleet of used vehicles is still in the lap of the transport manager, or the director in charge of transport.
There are three methods of dealing with the fleet of used vehicles: The vehicles can be offered for sale to the trade or public piecemeal; they can be advertised for sale by tender; or they can be placed in the hands of a firm of motor auctioneers.
The business of a transport manager is to provide, maintain and operate efficiently a fleet of vehicles. Even in the best of circumstances I would be surprised if this project under present conditions did not provide all the headaches that any one man can cope with. To ask him in addition to find accommodation for a fleet of used vehicles, prepare them for sale and conduct the complex—and often exasperating and time-consuming— business of dealing with trade and private buyers is not only unreasonable but probably impossible.
If we are to assume that the prime purpose of the exercise is to ensure that the used vehicles are not just "disposed of", but are sold at full current market value, an additional and intolerable responsibility is placed on the shoulders of the transport manager.
In my transactions with transport managers over many years I have found most of them to be uncannily well informed on current market values. But even in the process of handling 400 vehicles per week—private cars and estate cars, vans and heavy commercial vehicles—I find it difficult at times to keep abreast of the variations in demand and price levels. In addition to the specialized knowledge and experience of buying the right vehicles for his job, maintaining them to a high standard and directing the transport organization efficiently, it is not reasonable to expect the transport manager to be equally knowledgeable and experienced in handling sales in an expert manner.
Of course a separate sales organization could be established. This means premises, staff, advertising and all the heavy costs of a separate organization. Few companies whose business ramifications require a large fleet of vehicles are likely to consider this as a justifiable form of business diversification.
A very important aspect of expecting transport managers to deal with the sale of used fleet vehicles in addition to their many other duties cannot be overlooked. I refer to the pressures which are all too often brought to bear on them to sell vehicles at "advantageous" prices with certain perquisites coming their way.
Most transport men are intelligent enough and wise enough in the ways of business— in addition to having a high regard for and a sense of the value of their own integrity (a priceless commodity this!) to resist this kind of offer, but they can be forgiven for wondering at times whether their superiors are fully convinced of this.
The method of selling a number or a large number of fleet vehicles by tender is becoming increasingly uncommon for fairly obvious reasons. Most of the problems already mentioned arise here again with the addition of finding that unsuccessful buyers become disgruntled and cease inspecting the vehicles so advertised or submitting an offer by tender.
When a prospective buyer submits a tender for a number of vehicles he prices each vehicle individually, adds the total and submits his figure. If the offer is unsuccessful the prospective buyer has spent another day inspecting a fleet of vehicles, incurred some expense, prepared and submitted a tender—without buying a single vehicle. And he is wholly without information of the price received for the vehicles or how far his price was out. Although there was no evidence to substantiate, and none to justify it. I have, on several occasions, heard buyers who were repeatedly unsuccessful in their tenders express doubts about the secrecy of the tender submitted.
One buyer summed it up to me when he said "I have often submitted tenders without getting a vehicle but I have never gone to an auction without buying vehicles, so I gave up the expensive, time-consuming and so often abortive experience of offering for vehicles by sealed tender".
This opinion was expressed to me several years ago. In the past few years there has been a marked decrease in the number of vehicles advertised for sale by tender.
As I have stated already the most simple method of dealing with fleet vehicles is to have them sold by auction—but simplicity is not enough!
I can point to a list of public companies for whom my firm regularly sells vehicles which resembles the two back pages of the Financial Times. This. I can assure you, is the result neither of good fortune nor an accident of geography. Any company which sells a large number of fleet vehicles year after year, should engage a firm of motor auctioneers with the same care as it selects a firm of lawyers or a firm of accountants or auditors.
The three essential qualities which a motor auction firm should possess before its services are engaged are, more or less, the same qualities which are a prerequisite for any professional services: experience of long standing: well-informed knowledge of its clients' requirements—in the case of motor auctioneers, a wide knowledge of current values—and unblemished and undoubted integrity.
The designation on the letter paper of my firm is: -auctioneers, valuers and consultants." The second and last qualifications are as important as the first. Our services are—as the services of established, motor auction firms should be—in daily demand to give an indication of current value on all kinds of vehicles. Where one or two vehicles only are involved, we are asked to value by description on the telephone. This is always somewhat speculative as few people can describe vehicles in terms adequate for valuation. But we do our best.
Of course, no motor auction firm knows all the answers. Local authorities, in particular. have for sale vehicles specially manufactured for a highly specialized purpose. And who could put on that kind of vehicle an accurate assessment of the buying interest?
Consult and inspect
In the initial stages particularly, a company director or transport manager should consult with the auctioneers before consigning fleet vehicles for sale. The vehicles should be inspected and discussions should take place, especiallywhere firm ideas of value are held by the company selling the vehicles. Timing and the flow of vehicles are equally important. as are advertising and publicity.
We are always intrigued and often amused when approaches are made to cut the normal commission charge for selling a number of vehicles by auction. This, in our case, is rare but not unknown. The motor auction business is highly competitive—and a good thing tool—and if a guarantee could be given that the same qualities of expertise and integrity were universally available, there might be a point to this cut-price service. But, where does a fleet owner derive financial advantage if he saves or so commission on each vehicle and drops £10 or so on the sale price of each vehicle?
The top quality in experience, service and integrity is not readily available at a cut rate! Not one of the large public companies for whom we sell vehicles has ever queried our commission charge. We are satisfied that it is modest and reasonable. They appear to be equally satisfied.
If a company director were to suggest that his firm should "shop around" to obtain the services at a cut price of a legal firm or a firm of accountants to deal with the highly important business affairs of the company, he would be laughed out of the board room!
The only professional services worth having are the best—and it should be the function of the transport mana.ler who sells fleet vehicles by auction to see that he gets them.
This is an age of specialization and the operation, administration and development of weekly motor auctions is not only a job for a specialist, but a dedicated specialist who is willing to work hard for long hours for a modest return.
Occasionally we come up against a business executive who is not convinced that special expertise is called for to sell a fleet of vehicles, One in particular comes to mind.
A firm of international repute had a fleet of 60 vehicles, cars and vans, for sale. It sub mitted a list of the vehicles to us and gave us an indication of the total amount it expected to realize. We went over the list in detail with out inspecting the vehicles and confirmed that we would be able comfortably to realize the total figure it had given. At the firm's request we gave an approximate cost of commission and charges for selling.
Someone at executive level, it appeared, decided that the auctioneer's commission could be saved if the firm handled the sales on its own. As must always happen when vehicles are valued without expert knowledge, although the total figure was similar, some had been valued by the firm below current value and some above. The result was a quick sale of 30 per cent of the vehicles—those valued below current value—and the remainder left on its hands.
In the final analysis the firm lost about twice as much as they tried to save by not paying for the expertise of the auctioneers.
Although most modern vehicles sold by motor auction firms carry a short-term guaran tee of condition, our practice—and we believe it to be common—is to sell fleet vehicles without guarantee, clearly intimating on whose behalf We sell. Transport managers for the most part co-operate by giving information if any vehicle has a serious defect. This information we pass on to the buying public.
To sum up: a transport manager with a fleet of vehicles to sell should select a firm of motor auctioneers with full regard to their experience, ability and integrity: should consult with them on values, timing and publicity, and the end product will be—satisfaction.