Vehicle Acquisition and Disposal

Sound decisions come from good intelligence and weighing a number of requisite factors


Reconditioning can be performed by an auction, a specialized reconditioning company or by the company selling the vehicle. Cost analysis should be conducted before deciding which method is the best, CAFM says.

"Too much or too little reconditioning can adversely affect net sale price. Reconditioning must add value or significantly aid the sales process. Reconditioning which merely returns its own costs is a waste of time and effort."

Equally important to the reconditioning decision is the targeted market for the sale, price trends within the used vehicle marketplace and how the vehicle will be disposed of. CAFM says vehicles that are going to be sold via a retail method should probably get more reconditioning than those that will be remarketed through a wholesale channel.

In addition, there are many other factors that influence the type of reconditioning on a vehicle, including the vehicle type, present condition, age and value; mileage; amount of reconditioning required; vehicle downtime; current market conditions; and time of year a vehicle will be sold.

"Be especially judicious when considering the expense of mechanical reconditioning, because mechanical reconditioning is, for the most part, invisible to the buyer," cautions CAFM. "For example, a car or truck with a newly rebuilt transmission is normally worth no more than the same vehicle with an original, but properly operating transmission. When a vehicle is sold wholesale, minor mechanical problems resulting from minor wear and tear are usually not repaired."

Further, CAFM notes that a vehicle is almost always more valuable if it runs because an inoperable vehicle invites speculation about expensive repairs. "Avoid selling any inoperable vehicle if the disability, such as a locked starter motor, can be cured at nominal cost."

BEST RETURN

The goal from the beginning of vehicle acquisition through a vehicle's lifecycle is to select the appropriate vehicle for the intended application, perform proper preventive maintenance, do timely repair and upkeep, and dispose of it in the way that brings in the most money.

Establishing effective vehicle replacement and reconditioning policies can help a fleet acquire the best vehicle to get the job done while a good vehicle maintenance policy can maximize the dollars being returned to the fleet when the vehicle is sold. Both policies need to be ongoing, flexible and changed as appropriate to allow the broadest opportunities possible in acquiring, replacing and disposing vehicles.

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