Remarketing fleet vehicles can earn valuable dollars for units reaching set mileage limits — and can buttress new purchase budgets as well.
Typically, fleets will contract with auction houses to sell aged units, a process proven successful for many agencies. However, sometimes more dollars can be earned by keeping the process in-house. In an effort to increase efficiency and earnings from aging fleet vehicles, the State of Utah created its own state-run sales lot.
Surplus Sales Lot Boosts Budgets
Sticking to a regular maintenance schedule to keep a fleet in top cosmetic and mechanically sound condition is the simplest way to recoup the most dollars from remarketed fleet units, according to Dan Martinez, surplus property program manager for the State of Utah.
The State fleet also realized it could save big money by operating its very own sales lot for surplus units.
"We are able to operate more efficiently and at a lower cost compared to a private vendor, allowing a significant savings for the State of Utah," Martinez said. "On a consistent basis we have obtained a higher rate of return — approximately 19 percent higher — when selling vehicles compared to live auctions conducted by a private vendor. Based on sales data, in approximately an 18-month period, the revenue that would have been lost was just under $500,000."
Surplus fleet units — both passenger vehicles and heavy-duty equipment — are first offered to state and other government agencies for reutilization. Next, vehicles are offered to the public for purchase. In all, the State sells approximately 500 vehicles per year, and earns approximately $2.8 million in revenue.
Once earned, revenue for each unit is passed back to the agency that disposed of the unit, minus an approved rate.
"This [process] allows the disposing agency to lower service rates associated with leasing vehicles," Martinez said. "It is a cost savings to each agency of state government that leases vehicles from the state fleet."
The State also extends its surplus sale services to non-state entities, such as educational institutions, counties, and cities.
"Some of these non-state entities found it more efficient and experienced a better return on investment by using our agency," Martinez said. "This also answers any questions in regards to ethical disposal."
Combine On-the-Lot and Online Sales
Part of what makes the State's lot so successful is its commitment to selling vehicles both off the sales lot and online. Potential buyers can view cars in person at the actual lot or visit one of four Web sites listing the units.
The sites include:
- State of Utah Surplus site.
- Fleet Surplus Auctions.
- eBay.com (seller name "utahsurplus").
- Gov Deals, another nationwide site.
At the State of Utah Surplus site, potential customers can view vehicle and heavy equipment inventories, listed by year, make, and model. These reports include the serial number, mileage, original asking price, current discounted price, images, and maintenance history of each vehicle. In addition, customers can also access sites for other vendors where Utah's fleet units are listed, such as Fleet Surplus.[PAGEBREAK]
"The Fleet Surplus Auctions site allows our customer to purchase our vehicles 24/7/365," Martinez said. "The Web sites help us sell our vehicles by giving our customers a number of ways to purchase. We promote that our vehicle reports are real-time; when a vehicle sells, it drops off the report. When new vehicles are added, the report is updated by the database."
Public sales are conducted on a retail sales basis, but in some instances the State conducts a sealed bid and auction process. All items are sold as-is/where-is and must be paid for within five working days after the auction closes.
To encourage faster sales, the State instituted a graduated pricing scale. This scale is based on research on the optimal time to discount a vehicle and varies based on vehicle type. For instance, because passenger vehicles tend to sell faster and yield a higher return than trucks, a heavy-duty truck on the lot for a month might see a price decrease, whereas the car might not.
Adjust Pricing to Attract Buyers
Martinez explained the ability to control the sale price using a graduated scale allowed the State to receive the greatest return on its vehicles.
"We provide our customers with the necessary information as to when and the amount vehicles will be discounted. If a customer really wants a vehicle, they will likely pay more for it before it is discounted so they don't lose it," Martinez said. "The graduated pricing scale also helps customers know they are being treated fairly by all my staff and are getting the same good deal we offer anyone who chooses to purchase from our agency."
The State's surplus lot not only helps the state in terms of revenue, it also helps many of its citizens get a great car for a great price.
"We have a wide range of people who purchase our vehicles, from parents buying college students vehicles to get to school, first-time car buyers wanting a decent vehicle for the best price, to repeat buyers," Martinez said.
Find Creative Ways to Reduce Labor Costs
Fleets seeking to establish their own lots may wonder how the state handles pre-auction tasks such as repairs and detailing. While these can be expensive to outsource, Martinez uses low-cost resources to further save dollars. For instance, minor repairs — such as batteries and tire inflation — are performed by state surplus staff. Additionally, detailing is performed by workers who participate in Workforce Services, a training program whose aim is to get the temporary worker back to the work force. This work is provided at no cost to the agency. Surplus has also worked with youth corrections to provide lot clean up at the cost of less than $4 per hour, per worker.
Martinez said in the end his focus was not on how to gain more revenue for his agency; rather, he focuses on increasing revenue for the disposing department, which results in lower rates to the leasing agencies and an overall lower cost to the State of Utah.
"As an employee of state government, we are public servants and when we are able to lower costs associated with the running of state government, it should be done," he said.
Marketing a Sales Lot
Marketing a sales lot is important, as it ultimately earns more revenue for state agencies; however, spending a lot of money to do the job defeats the purpose. Dan Martinez, surplus property program manager for the State of Utah, offers these tips for affordable marketing, all of which the State of Utah has put into practice:
- On fleet's Web site, highlight high-interest vehicles and offer special discounts on specific models.
- Obtain a listing of business types with the Department of Commerce, then market to the target audience: vans for daycares, flat bed trucks for landscaping businesses, or Crown Victorias for taxi companies.
- Install license plate covers on all vehicles with the agency name and Web site. Advertising right on the vehicle reaches a lot of people at a very low price.
- Take advantage of free advertisements where available.
- Offer great customer service — word of mouth goes a long way.
"We apply every effort to make sure our customers are provided the highest quality service, and encourage them to share their experience with us to others that may be in need of a vehicle," according to Martinez.