Fleets fall short of CAP Clean

Long-term trend data from BCA’s Pulse Report underlines the fact that the true market performance of fleet and lease cars is generally not equivalent to CAP Clean.

With a data set representing several hundreds of thousands of vehicles going back to the beginning of 2004, fleet and lease cars averaged 97% of CAP Clean over the 42-month period.

The highest quarterly average achieved in the period was 98.4% in the autumn of 2005, while the lowest was the 2nd Quarter figure in 2004, which averaged 95.2%.

Over the last three years, the highest performing quarter on average is Quarter 3, averaging 98.24% of CAP Clean. The lowest is Quarter 2, averaging 96.0% of CAP

CAP Performance by month also throws up some interesting data. September is the peak in the annual cycle, with 2006 averaging above CAP Clean and 2005 achieving over 99.5%. The relative strength of the performance in August might come as a surprise, with 2005 averaging 98.6% and 2006 averaging 98.1%.

Following the September peak, CAP performance falls away until the New Year, when strong buying activity generally sees prices firm again until Easter-time. CAP performance then falls again, post-Easter before building up to the September peak. The lowest monthly figures recorded in the last two years were in January 2006 (93.9%), followed by May this year (96.3%).

BCA’s Tony Gannon commented “Most volume sellers, not surprisingly, benchmark against a nominal guide price figure. It is interesting to see the reality of what the fleet and lease sector actually achieves on average. The message is that the majority of vendors are obviously flexible enough to react to changing market conditions, and are prepared to value their vehicles in line with current expectations rather than simply following CAP Clean. It also highlights the importance of an accurate and honest appraisal of a vehicles value before it is offered for sale.”

CAP Black Book Valuation Relationship Manager, Craig Bridgman added "BCA are absolutely right to recommend that vendors properly appraise vehicles when setting reserves, rather than unthinkingly following a price guide. Not only does automatically expecting CAP Clean for cars, without properly assessing them, risk alarming the market when they fail to achieve it, but it doesn't help remarketing companies do their job most effectively. On top of that, it is likely to lead to vendors suffering increased costs because every failed sale extends the time exposed to depreciation. Then there are holding and transportation costs for vehicles that fail to sell on several occasions."