Company-Owned Vehicles: 3 Disposition Challenges

When discussing the challenges associated with company-owned vehicles, most people think of topics such as maintenance, accidents, and insurance. However, the most challenging aspect of company-owned vehicles, and most overlooked, may actually be determining your course of action when it comes to getting rid of a vehicle. Here are 3 of the most common challenges that we see companies struggle with when it comes to the disposition process.

In This Article

Deciding When to Get Rid of Vehicles
Determining How to Sell the Vehicles
Obtaining a Replacement Vehicle

Deciding When to Get Rid of Vehicles

When purchasing a brand new $35K asset, it may seem odd to be thinking – “when do I optimally want to get rid of this?” – If you don’t have a thoughtful answer to that question, you are likely going to spend more money than you should. Most times, you’re going to be the one having to make that call. So how do you decide?

When we ask companies how they make the decision, we hear a variety of answers ranging from “We just run the vehicles into the ground” to “We switch the vehicles once they start to get up there in age.” However, the one consistency that we notice is the lack of a defined life cycle. A defined life cycle takes all of the guess work out of the decision and is designed to cycle vehicles at the optimal time based on use, condition, and the market. Without a defined life cycle, chances are that your company is throwing money out of the window.

Determining How to Sell the Vehicles

Once a company decides that it is time to get rid of a vehicle, they must determine their preferred method of disposal. If they elect to sell the vehicle themselves, they’ll have to choose how and when to advertise, set an asking price, field numerous calls, go on test drives, negotiate a final price, cancel or transfer the registration, adjust their insurance policy, etc. Adding to the list of potential headaches, several states treat a business selling a vehicle differently than an individual, resulting in the need for the business to obtain a “Dealer License” in order to remain compliant with state law.

Instead of selling the vehicle themselves, many companies elect to trade their vehicle in to a dealer. This solution is quick and easy, but the offset is that you are almost always leaving significant money on the table. Typically dealers are not going to sell your used commercial vehicle on their lot. They will sell your car at auction, and as a result offer you quite a bit less than even the wholesale value of your vehicle.

Obtaining a Replacement Vehicle

Once you have disposed of your old vehicle, you have to decide what’s next. In most cases, the business need for a vehicle still exists. That means it’s time to consider your options for replacement. While this may seem like the easy part, the process is actually much more arduous than it seems.

First, you have to decide which vehicle you’d like to purchase. Once you settle on a vehicle, you’ll then need to assess which additional options you’d like included in the vehicle. Next, someone will need to be responsible for negotiating with the dealer or dealers in order to ensure that you’re getting a fair price. From there, you’ll need to assess the pros and cons of financing the vehicle versus paying cash. Finally, you’ll need to ensure that the vehicle is properly registered and insured so that you don’t run into any potential problems down the line.

This process will undoubtedly take many hours. And if there is more than one person involved in the decision making, that amount of time will increase exponentially as you’ll have to come to an agreement on every step along the way.

If you’re interested in putting your company-vehicle burdens on someone else’s to-do list, for the same or less money than you’re currently spending, give Motorlease a call at (860) 677-9711 or email us at info@motorlease.com.