Used Car Cycles Show Long Term Changes
Click on the title to view the link to a story about the current used car market and how the new car crisis in 2008 has affected the used car market as well.
Many people ask me for advice regarding purchasing a car and most that I speak with are having a hard time understanding why the used car market is showing signs of inflation. The simple reality is that there are not enough late model used cars to go around to match the current demand. The trickle down effect is that the less expensive used cars available today are worth more than they were a year ago.
I recently offered up some retired vehicles from our company fleet to employees at what I thought were fair but reasonable prices. We had employees leaving their names on a list in case the person before them didn't take the car. In many cases the cars that were priced less than $3,000 had five or six people waiting to see if they would be available.
This is significant for a fleet manager to be aware of since the revenue from the turn over of the fleet can be a substantial amount of money for the operations of the organization. Consider these numbers. A company that is replacing one-hundred vehicles that last year averaged $4,000 in returns may see them sell for up to 25% more in the current market. That translates to a $1,000 return per vehicle, or $100K in additional revenue. If the company is turning over vehicles that are higher in value, the return can be even more significant.
It is important to know your market. Understand the options for vehicle disposal and how to maximize the returns on the assets that are being replaced. It can be a fairly simple method to improve the bottom line of your operation and keep your boss happy.
Many people ask me for advice regarding purchasing a car and most that I speak with are having a hard time understanding why the used car market is showing signs of inflation. The simple reality is that there are not enough late model used cars to go around to match the current demand. The trickle down effect is that the less expensive used cars available today are worth more than they were a year ago.
I recently offered up some retired vehicles from our company fleet to employees at what I thought were fair but reasonable prices. We had employees leaving their names on a list in case the person before them didn't take the car. In many cases the cars that were priced less than $3,000 had five or six people waiting to see if they would be available.
This is significant for a fleet manager to be aware of since the revenue from the turn over of the fleet can be a substantial amount of money for the operations of the organization. Consider these numbers. A company that is replacing one-hundred vehicles that last year averaged $4,000 in returns may see them sell for up to 25% more in the current market. That translates to a $1,000 return per vehicle, or $100K in additional revenue. If the company is turning over vehicles that are higher in value, the return can be even more significant.
It is important to know your market. Understand the options for vehicle disposal and how to maximize the returns on the assets that are being replaced. It can be a fairly simple method to improve the bottom line of your operation and keep your boss happy.
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