End of life disposal options
June 15, 2011
by Gerry Frechette
Vehicle fleet managers have many issues to deal with in looking after their owned vehicle assets, but none is more important from an organizational point of view than actually getting rid of them.
That’s right, disposing of them at the end of their useful lives. There are many options available to organizations that own their vehicles, and of course, those choices reflect the objectives of the exercise, which can range from getting the vehicle off the books quickly and at low cost, to maximizing the sale price of the vehicle so as to satisfy the expectations of the owners, which can include shareholders of a public company, or taxpayers in a government environment.
Auctions, both the traditional physical variety typified by ADESA, and the newer online versions like OPENLANE, are a widely accepted method of disposing of vehicles, and you might get something approaching a retail value for them depending on demand at the time. The auction companies can provide all services, from driving the vehicle out of your yard, to sending you a cheque.
Shrewd fleet managers, like the City of Vancouver’s Doug Smith, with some 2,000 licensed vehicles, know how to play the market. “We are careful not to flood the market,” he says. “If we have 28 recycling trucks, we’ll let them out two or three at a time. If we sold them all at once, we’d get a good price for the first 10 and scrap metal prices for the rest.”
Other fleets can have an effect on your vehicle sales too, says Smith. “We can’t sell our large, full-size ex-police cars to the taxi companies any more, as here in Vancouver, they all use Prius hybrids and Corollas now. So all those cars go down to the US.”
With the popularity of used vehicles growing by the year, it is no surprise that the OE manufacturers have jumped into the remarketing business, aligning themselves with auction houses and setting up programs with their dealers to retail reconditioned used vehicles, or to assist the dealer in selling stock at auction. Predictably, the business is more well-established in the US, and manufacturers are using that experience to set up operations here in Canada.
Ford of Canada, for one, is supporting its fleet customers with its Automotive Remarketing Services program, in which Ford products being disposed of from fleets are supported both at auction—in this case ADESA—and through the dealer network in other cases.
Vehicles from commercial fleets, rental companies, and financial institutions including Ford Credit, are reconditioned as needed, and sold by ADESA at supervised Ford-specific auctions, either at Ford dealer-only events, or at those open to all used car dealers.
“Most of the vehicles we get from fleets are in the one-to-five year-old range, up to 100,000 km,” says Doug Collis, remarketing sales manager at Ford. A dealer would have the options of selling the used vehicle on his lot, taking it to the auction of his choice to sell it there, or engaging Ford ARS to manage the process and sell it at one of ADESA’s 13 auctions in Canada.
Ford’s ARS is a new program for dealers, and the program is still in the test phase in Canada. From the US experience, it should provide dealers with more flexibility and economies of scale in optimizing their pre-owned inventory, as Ford ARS will represent the dealer’s vehicles at auction.
For the commercial fleet operator, ARS offers the benefit of Ford’s long experience with auctions. “We offer the expertise of our staff and our knowledge of the industry, to represent that vehicle, and to put a value on it.” Anything that comes to light after the sale, including arbitration, will be made right, according to Collis. “We’ve been selling vehicles at auction for 30 or 40 years, so we stand behind them. We tell the buyers everything we know about the vehicle and accurately describe its condition.”
Of course, the case for remarketing would be similar across the industry, with all the other manufacturers that offer a similar program.