As fleets buy new trucks to replace less reliable, older units, fleet managers are left with millions of dollars of surplus in the form of idle trucks in their yards. By taking a proactive and strategic approach to the remarketing process, fleet managers can achieve maximum recovery for surplus trucks.
Most organizations remarket approximately 20 percent of their fleets each year; for a large company, that could be approximately 1,500 trucks. Typically, these trucks are around five years old and have more than 200,000 miles on the odometer.
The reason for the turn-over after five years is threefold: expiration of warranty, completed depreciation, and the recovery value is generally higher for a truck in that age range.
Getting the Most Value
The number of trucks an organization has determines how it approaches selling them on the secondary market. Smaller institutions with fewer trucks may handle remarketing in-house; while larger institutions with trucks across a variety of locations commonly work with large, professional auctioneers.
If handling remarketing in-house, some best practices should be followed to ensure maximum recovery, including:
- Determine estimated vehicle value: Look at value guides, such as Black Book, or investigate what similar vehicles are going for at auction.
- Determine a sales channel for the vehicles, such as online, private sale, or a local print advertisement.
- Adjust marketing to attract the right buyer type. There is a unique buyer base depending on the truck’s condition, make, model, and location.
- Schedule a preview period so potential buyers can come inspect the truck(s).
- Take quality images and video to provide potential buyers through online channels.
- Plan for truck removal.
Navigating the Auction Process
Auctions are historically the best way to turn large numbers of inventory back into cash quickly, and working with a professional auctioneering partner can save valuable in-house time and resources.
Some items should be considered when looking for a partner to manage the fleet’s remarketing. For example, a local auction company may be sufficient to handle all aspects of sales and marketing in a specific market, to local buyers. However, if an organization has assets across a variety of locations, it should partner with an auction company that has a national reach and can market to a national buyer base. Simply put, more buyers mean more competition, which leads to higher recovery values.
Other factors to consider when choosing an auction partner include:
- Does it offer its own, safe location(s) to house trucks?
- Can it inspect and perform maintenance on the truck if needed?
- Is it able to provide an evaluation of the truck?
- Does it offer reserve pricing to cap any downside potential on the final pricing?
- Will it complete all aspects of the process including transportation, marketing, and sales?
By gaining a better understanding of the secondary marketplace, establishing remarketing best practices, and successfully navigating the auction process, fleet managers can make their companies’ surplus assets work for — not against — the bottom line.
About the Author
Tom Burton is the president and EVP of Liquidity Services’ Capital Assets Group, an asset recovery partner to more than 6,000 organizations headquartered in Washington, D.C. He can be reached at email@example.com.