All the above of course requires Motability to individually manage (micro-manage) each returned vehicle and the realisation each individual vehicle makes – which they don’t. Nor could they really be expected to do it for circa 3000 vehicles per week (based on their stated buying of 200,000 vehicles per annum on a reasonably static customer base). They are all aggregated. Rather than individually managing Fred Blog’s returned Ford Focus (very low mileage VGC etc), it is sent to auction as part of a batch (if the dealers don’t want first dibs via the mfl Direct scheme). This auction batch will have an overall expected price. So, whilst Fred Blogg’s returned Focus may exceed the expected price at auction, Joe Smith’s 60.000 mile Focus may not etc etc. However, to add in a further illustration, what if it is a quiet auction day (lots of stock but few buyers) when Fred’s Focus is sold and only sells for a minimum price. Yet, Joe’s crap Focus is sold the following day with loads of buyers and less stock present and exceeds its expected price? This is why returns are aggregated. It is the way big businesses do it to even out variables (thus cash flow) and keep costs down by not micro-managing each individual vehicle. In Motability’s evolutionary circle, it also equates to the GCB also being aggregated (provided the vehicle meets the minimum condition based on the dealership’s ‘ticky box’ report). It doesn’t matter if Fred’s vehicle way exceeds the minimum condition necessary to generate the GCB and Joe’s simply meets the minimum condition. All get paid the same GCB. For Motability to individually micro-manage each returned vehicle at such volumes would cost Motability (and ultimately the customer) a fortune.
Thank you BG for your perfectly simplified comment ?
Really Kezo, is that your definition of a simplified comment.
Firstly Motability assesses each car (micro manage as Big Dave say’s) of course they do they have to put a price on each car initially for their website, and generally the best examples with the lowest milage, best condition and especially the ones loaded with expensive optional extras are swept up by dealers, I know my last two were provisionally sold to dealers before I had even handed them back.
They do not put out the rest in auctions as job lots, they are there as individual sales and it is not relevant to my suggestion as to whether the auction had a good day or a bad day,
The only relevant thing is that the car’s AP was worked out on projected residual values and if Motability get back in excess of that figure (which they mostly do, hence the yearly £1 million+ profit) which is referred to as lease equity, because the car made more based on whatever. Then surely a small part of that excess profit should be returned to the customer. As I said with Motability getting the book price + 20%, plus 75% of the rest and the customer getting a 25% of the excess after the book price and the untouched 20% profit. Motability Operations were set up to trade in cars and are well capable of coping with my proposed set up.
Why can’t Motability do what some leasing companies do and let the customer know from the start what the car is going to be worth at the end of the lease, simply because they know it is likely to be more than the projected residual forecast that they built into the AP.
Motability Operations were never set up to make over a Million profit a year and to have over a Billion profit in the bank, whilst their customers are struggling to meet high APs, to meet their disability needs.