Fleets “hanging onto” cars and vans in an attempt to achieve unrealistic and inflated valuations are causing distortions in the used car and van markets, say Glass’s. Reluctance to sell below these guide prices, and continually resubmitting vehicles for sale at the same or other auctions, creates a range of problems, said Rupert Pontin, director of valuations. He explained: “Lately, we are going through a phase where we see the same cars and vans presented at auction time and again – and our feedback says that failure to reach book values is the reason.
“With some of the industry price guides consistently overvaluing the market in recent months, it appears to be becoming an increasing problem. Large numbers of vehicles are remaining unsold. “Firstly, this means businesses are holding onto vehicles much longer than they should, so are taking longer to convert valuable assets into cash. Also, while they remain on the books, the value of these cars and vans nearly always tend to continue falling, leading to a double loss.”
Pontin added that the trend also made it difficult for market experts such as Glass’s to work out exactly what was happening to the value of certain models. “A particular car or van may look like it is doing quite well but then it becomes apparent that this was due to fleets holding onto stock in an attempt to reach unrealistic guide prices. Eventually, these cars have to be ‘dumped’ onto the market and you see a sudden fall in values as oversupply occurs. “I’m pleased to say that, in the vast majority of cases, we have identified where this is happening and adjusted our own valuations accordingly, but not everyone in the market can reflect accurate values as swiftly as we can.”