MAXIMISING RESIDUAL RETURNS ON YOUR FLEET
Proven fully managed simultaneous multi channel e-retailing NOW marketing prior to lease end

Thanks to the fast-track growth delivered by our pioneering Fleet2Street suite of remarketing solutions, Carsite have secured a new investor relationship with Cavendish.

What Cavendish recognise are the opportunities stemming from a truly innovative and original offering that demonstrably works. For example, last month we heard from Hitachi Capital Finance,  about the success of Preview. That’s our system under which our clients are successfully selling cars to retail customers before the end of contract. Pulling forward the exposure of your vehicles to a buying audience is a brilliant way of simultaneously maximising returns and reducing costs. But it is more than that; it is a way of being proactive instead of passive.

De-fleeting into an open wholesale market is essentially a passive process because the asset’s revenue-generating life is over and it has become a dead risk. This may not feel so passive in the excitement of a bustling sale during one of those rare strong markets where values are rising. However, contrast that with the situation in the disposals arena through most of last year, when the usual slow but certain underlying reduction in residual values turned into a haemorrhage. Disposing even into a ‘typical’ trade market will always therefore be the passive option in comparison with marketing the vehicle while it is still earning revenue.

Preview was a natural development for Carsite because our business philosophy is founded on a principle of doing something when it is possible instead of waiting until it is urgent. That has given us the edge because by thinking ahead we have won the time to design genuinely innovative best-of-breed systems and processes and robustly test them before launching into a market already overcrowded with the same solutions.  Preview  is a powerful way of maximising your chances to make every day count as a potential revenue earner.

It is that kind of original thinking and excellence in execution that brought Cavendish on board. In addition to the £5m of founder money already invested, the new investors bring a further cash investment and a wealth of experience to assist the fast-track growth that Carsite is achieving.

And with their backing I can promise there is more where that came from – which will be great news for our existing and new partners going forward.

If you are interested in ways to become more proactive in your disposal strategy I hope you have found some food for thought in these columns over recent months. To speak to us about faster disposals delivering average values significantly above trade prices contact Carsite on 01273 234664.   

Over the past few months readers of this column will have seen me promoting Carsite as a reliably successful remarketing partner who can take away much of the logistical pain around disposals and deliver higher returns. And I am especially proud of having achieved what I call the ‘Holy Grail’ of e-remarketing with our Preview and Postview systems, which achieve sales before cars have even returned from lease, or during the ‘dead’ time between sales after disposal. But this month I am going to take a breather and hand over the talking to someone who – unlike me – does not have a vested interest in promoting Carsite.

Tim Bowden is Head of Operations at Hitachi Capital Vehicle Solutions Ltd and he came to us looking to broaden the potential retail audience for Hitachi Capital’s end of contract vehicles. That resulted in the launch of an affinity e-retail site which went live in March 2007.

What were you looking to achieve when you approached Carsite?

Around 10% of our cars were already going back to drivers after termination and some to staff internally. However we were looking for a way of offering cars to the broader retail community but without becoming involved with the transactional side that retail sales would involve. We needed a partner with a strong track record in e-commerce solutions and not just a remarketing partner who also does e-commerce. We were looking for the ability to develop and manage systems that were tailored to our needs rather than just buying an ‘off the shelf’ system. Importantly we wanted a solution that would enhance and not compromise the Hitachi Capital brand because we are passionate about the quality we offer and our image. The skills and track record of the people behind Carsite provided a good blend to achieve that.

How have you experienced Carsite as an e-remarketing partner?

We wanted a service we could be proud to say we were offering, which would give people confidence to buy cars from us on a robust platform which would not compromise our credibility. It has worked well. We have consistently achieved a level of price premium over traditional disposal methods, after costs, that fully justifies the use of this sales channel. Our buyers have been reassured by all the testimonial evidence from previous customers that is offered on the Carsite website and even on the rare occasion when they have seen the car and then changed their mind, they have still gone on to buy another from us.

Have you sold any pre-termination cars via the Preview system yet?

Preview is working very well for us and in fact 10% of the cars offered via Preview in the first month have been reserved by buyers. This is great news because anything we can do to pre-sell cars minimises our stocking costs and enables us to increase the values we achieve. The introduction of Preview has also broadened the choice of vehicles we are able to offer, which makes the whole offering more attractive to retail customers. I have been pleasantly surprised at the number of people who have been prepared to reserve a car having looked at  the detailed description on the website, but without actually seeing it in person.

Recent reductions in fuel prices are one of the only glimmers of good news as talk about recession is widespread. The economy shrunk by 0.5% between July and September, giving the UK the worst economic performance since 1990.  Nobody expects the economy to pick up now until 2010 at the earliest. It is in times like these, when familiar trading patterns are disrupted, that it is easy to lose heart.

But the best ideas are often conceived in the face of difficulty. Creative thinking can start to flow from the necessity to change due to uncomfortable circumstances forced upon us.  We start to explore possibilities and ideas we wouldn’t have taken time to think about when everything was going to plan.  This is the time when ideas and innovations, if implemented appropriately, can turn adversity into opportunity. 

I’m not suggesting we should welcome falling residual values, job losses and all the misery and worry that accompanies economic downturn.  I am, however, suggesting that times like these tend to reveal fundamental weaknesses in old familiar structures and processes to which genuinely original thinking can find solutions.
However, is there time to make changes that can have an immediate positive impact? It’s taken us ten years of constant design, developing and testing to prove that our innovations are successful; but then we were very ambitious in setting out to change the business model, to enable the fleet disposer to get nearer the retail price for their end of lease assets. 

When we were approached by Bank of Scotland who wanted to pilot the ‘Fleet2Street’ e-retail channel, they quickly saw us as their innovations partner.  They wanted the ability to continue to use eBay for auctioning cars but they also saw that the fleet industry would benefit from having an autonomous e-commerce platform.  Here was a bank that, given the right content and innovative thinking, would give e-consumers the confidence to go ahead and hit a ‘buy it now’ button without first physically seeing the car.  We just had to provide a trusted platform where used cars could not only cost less than from a traditional dealer but were also RAC inspected so e-consumers would feel safe and confident to make the decision to purchase.

www.carsite.co.uk was the result of that innovative thinking.  It also provided HBOS with a solution in supplying staff, customers and affinity groups with a white label web site with the knowledge that from the listings to the physical handover the buyer would experience continuity of quality, accuracy and excellent customer service.
Yes, it took time, but innovation is nothing without appropriate execution and history is littered with examples of brilliant ideas that failed for this reason.  Building a really strong platform has enabled us to speedily add new solutions for innovative client partners.   For instance, when one of our blue chip leasing companies asked us to create a service whereby retail buyers committed to purchasing cars before current contracts had even ended – reducing book-drops and faster release of your assets - we were able to add PREVIEW to the Fleet2Street retail offering.
We are passionate about genuine innovation. Of course we want you to know about the success of Fleet2Street,  what’s the point in being a secretly successful business?! But we also want to encourage original thinking, lateral thinking, out-of-the-box thinking.  The results can provide ways to deliver real advantage and ease the pain during the times ahead.
 
Douglas Rotberg
Managing Director

There is nothing like a shift in economic circumstances to reveal just how much risk is tied up in assets. In business, it is tempting to rely on the tried and tested ‘traditional’ ways of doing things.

Then suddenly the landscape changes and nothing is guaranteed. Unfortunately, that is the story being played out today throughout the economy and nowhere more painfully than in the automotive sector.

CAP and Eurotax Glass have both reported that values have fallen more in just a few months than would usually be expected over a year. These are tough times to be disposing of the typical fleet car, with dealer forecourts awash with used vehicles and consumers more wary than ever of committing to buy. Never was there more need for an innovative approach to managing a growing problem.

Back in 1997 we saw the need for such an approach. And today after exhaustive development, testing and millions of pounds in investment - our disposal partners are benefiting from the Carsite core value of innovation.

Although technically sophisticated and robust, Carsite’s approach is founded on a simple proposition. Just as it is wise to spread your risk, it is important to maximise your opportunities. And we’re proving it works - how many other car retailers enjoyed their best month in August and achieved prices consistently higher than CAP, as Carsite did?

How do we maximise the opportunities for disposal at higher-than-trade values in a falling market? The answer is by making vehicles electronically available to multiple audiences and backing that up with a retail car trading model that is trusted by the people who ultimately call the shots - consumers.

We call our business model ‘Fleet to Street’® - a fully managed e-retail defleeting solution which has delivered millions of pounds of sales to our partners and won us the title of eBay Motors first ever ‘Seller of the Year’.

Constant development of our model has seen us creating the unique ‘PREVIEW'  fully-managed offering,  which successfully markets vehicles to a wide retail audience before the end of contract.  Our Driver Sales solution is offered as a FREE benefit alongside PREVIEW.  Our partners are no longer talking about reaching for the Holy Grail of automotive retail – we’re achieving it for them!

OK, so these are early days, and a major impact on volume disposal hasn’t been achieved yet – so what about the volume of vehicles which currently go to auctions?  When a vehicle is physically at auction, or other physical disposal site, our POSTVIEW  solution keeps vehicles  right there in the e-retail spotlight. They are actively and constantly marketed to potential retail buyers even during the ‘dead time’ between sales. After all, every day counts – so why not continue to e-remarket!

Innovation is the key to success when times are good but when times are tough it really comes into its own as a way of creating hitherto unseen opportunity. We are proud to have pioneered successful multiple-platform e-retailing and I look forward to talking more about how we have achieved it next month.