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Factor in total cost of disposal to avoid end of life costs

Factor in total cost of disposal to avoid end of life costs
Leasing companies and fleet operators need to factor in disposal costs before committing vehicles to remarketing channels otherwise they may incur damaging end of life costs, according to Adesa UK.

The online remarketing specialist warned that vendors and fleets incur ongoing disposal charges because they have not assessed how much the traditional de-fleeting process is costing them.  

Jonathan Holland, Adesa’s UK managing director, is urging companies to adopt a Total Cost of Disposal (TCD) approach to achieve the best possible returns on their assets.

“Fleet cars start racking up costs the moment they reach the end of contract, which is why we advise vendors and fleets to consider TCD as part of their Total Cost of Ownership calculations; this is the missing piece in the running costs equation,” he said.

Adesa is advising that TCD should factor in the costs typically amassed between end of contract and resale including charges for vehicle movements, storage, inspection and refurbishment as well as depreciation.

Holland explained: “End of contract cars are not always collected the day they become available and can also spend time in compounds awaiting the next available auction date.

“All the time they are losing value through depreciation, third party stocking costs and daily interest charges accrued whilst the vehicle is moving through the traditional remarketing process.

“From de-fleet day to a car’s appearance at auction can often take weeks, so vendors and fleets risk being hit by a month’s book drop and costly daily stocking charges which are seriously downgrading the returns they are achieving.

“Vendors need to start factoring in TCD to achieve the best possible returns on their assets.”

Adesa, which has long advocated the advantages of remarketing cars online the moment they are de-fleeted, has further reduced its de-fleet timeline with the recent launch of Adesa IVI (Intelligent Vehicle Inspection).

The remarketing solution deploys artificial intelligence to enable drivers to carry out self-appraisals using smartphones or tablets, so that vehicles can be remarketed 24/7 online before they even reach end of contract.

“The AI-based Adesa IVI platform enables cars to be remarketed sooner and faster than has previously been achieved in the UK, with vendors now able to get cars off their books and onto dealer forecourts in a matter of days not weeks,” concluded Holland.