It has been an incredible 2009 so far in the automotive industry with inconceivably two of the “Big 3” going into and coming out of bankruptcy protection.  Purse strings are still fairly tight on the credit side restricting the way companies were used to doing business in the mid 2000’s. We have all had to change business practices over the past two years and I believe out of these changes will come obviously resilient but also more efficient organizations regardless of sector.

While most have been disgruntled by all the bad news others have been able to take advantage of some positives that are occurring during these tumultuous times including you the customer. Because of the shortage of vehicles both in new and used and the fact that consumers are still uncomfortable with the state of the economy, those looking to replace or just purchase, for the most part are leaning towards used to save some money. Although most dealers have cut back on the amount of inventory they carry, they still need to have some around for potential retail sales and that is why the auction conversion rates and prices have been the highest we have seen consistently in decades. As we speak, there simply are not enough decent vehicles around to meet the consumer demand.

Now we need to realize that we are not out of the woods yet as the prices are only up slightly from where they were a year ago at this time and nowhere near where they were two to three years ago but prices are up none the less. The more surprising thing to me, and most others involved in remarketing is that the prices have remained high all year long. The volumes that were expected to hit the market have not (but we hear they are coming) which has contributed to a greater demand than supply driving prices up.

To illustrate, the auctions conversion rate (nationally) is at 82% as of June 30th compared to 74% at this time last year. The Foss numbers show even more improvement, as we are just under 70% compared to a disappointing 55% one year ago. Even more impressive is the fact that our average km’s on units sold has increased but so has our return by over 5% over our 2008’s numbers. In other words we are selling higher mileage vehicles for more money this year.

After the first half of the year Foss National Leasing is converting at a 3.5% higher rate than our immediate competition as well, our average return rate (or sale price) is 10% higher than the competition even with an average of 20,000 km’s more per vehicle. These statistics can be attributed directly to us supplying maintenance and vehicle history reports. We have preached for years that the dealers will pay a more if they know what they are getting and here is the proof.

That leads me to another very important topic, which is the issue of the changes in the Ontario Motor Vehicle Dealers Act (M.V.D.A) that was to become official this past April but has been extended to January 1, 2010. In a nutshell changes that will affect us all is FULL DISCLOSURE on all units sold. I have supplied O.M.V.I.C.’s  web address (www.omvic.on.ca) for those of you who want to learn more. We also hope to have a session in which you, the clients can attend and ask questions that pertain to your fleet.

While the combination of our maintenance history reports and CarProof vehicle history reports will capture most occurrences while the vehicle is in your driver’s care it does not capture all accidents or repairs done to the vehicle. It is imperative that you educate your drivers to report ALL incidents to you so that you can inform us to declare upon disposal or we expose you and ourselves to a time consuming, very costly procedure of recourse. If the undeclared incident can be proven that it occurred during the term of the lease the vehicle will come back to us having to resell possibly costing your company thousands of dollars! I can’t stress enough the importance of beginning to train your drivers to report EVERYTHING to you and this information needs to be passed on to Foss National Leasing as we will not be held liable nor will we incur any costs involved in transaction recourse for non disclosure issues.

Enjoy the rest of your summer and unlike the temperature so far, let’s hope that the conversion rates and prices remain high.

Again, I invite you to contact me directly with any questions, cares or concerns regarding the above or any remarketing issues that you may have.

Regards,

Todd Ritza

Vehicle Remarketing Manager

Foss National Leasing

tritza@fossnational.com

905-709-7686