residual value and risk management l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Residual Value and Risk Management PowerPoint Presentation
Download Presentation
Residual Value and Risk Management

Loading in 2 Seconds...

play fullscreen
1 / 31

Residual Value and Risk Management - PowerPoint PPT Presentation


  • 364 Views
  • Uploaded on

Residual Value and Risk Management Bukarest 2008 Agenda Introduction EurotaxGlass`s Motivation – why residual value and risk management ? Two most common mistakes Ideal approach and possibilities to influence residual value performance EurotaxGlass’s Group Strategy The leading provider

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Residual Value and Risk Management' - Anita


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
agenda
Agenda
  • Introduction EurotaxGlass`s
  • Motivation – why residual value and risk management ?
  • Two most common mistakes
  • Ideal approach and possibilities to influence residual value performance
eurotaxglass s group strategy
EurotaxGlass’s Group Strategy

The leading provider

of data, solutions and business intelligence services

to the European automotive community

Integrated pan-European organisation

providing exceptional local support

Single source for European valuation, specification,

repair and estimation data and systems

Decision-critical intelligence

to all key sectors of the European automotive lifecycle

eurotaxglass s coverage
EurotaxGlass`s – Coverage

New subsidiaries

+ Rumania

+ Sweden

+ Turkey

comprehensive range of products and solutions

Eurotax

Print Valuations

  • Vehicle specification (make, model and equipment)
  • New car prices and history including optional equipment
  • Current residual value (trade-in and retail)
  • Vehicle specification (make, model and equipment)
  • New car prices and history including optional equipment
  • Current residual value (trade-in and retail)
  • Future projected residual value

Eurotax

Autowert

Eurotax

Repair Estimate(IKE32)

  • Part prices and labour hours for damage repairs / painting
  • Overlap time logic applies intelligence to repair operations
  • Proprietary calculation tools for repair quotations
  • Claims handling and communication solutions

Eurotax

Forecast

Eurotax

Claims Control

  • Parts prices and labour hours for maintenance operations
  • Standard operations for each service interval
  • Repair manuals
  • Lubricants database
  • Advertising in printed guides and information magazines
  • On-line banner advertising and sponsored link revenue
  • Sponsored forums at key industry events
  • OEMs using guides for new car sales promotions
Comprehensive range of products and solutions …

Product selection

Product group overview

Specification and valuation

Repair and calculation

Service and maintenance

Advertising

leasing eurotax supports the full value chain
Leasing: Eurotax Supports the full value chain …

… and all supported by a common, international and unique code

Major leasing operations

Product

Management

Sales

Operative

Fleet

management

Cash & risk

management

De-fleeting

One common unique Eurotax Code

New car price data

New car price data

Valuation data

Fleet revaluation

Valuation data

Repair calculation information

Repair calculation information

Service & Maintenance data

Service & Maintenance data

Light damage estimation

Service & Maintenance data

Total cost of ownership

Total cost of ownership

Forecast

Forecast

Remarketing benchmark information

Current Core products

Further products to be launched in Rumania later

„The one-stop shop“

agenda8
Agenda
  • Introduction EurotaxGlass`s
  • Motivation – why residual value and risk management ?
  • Two most common mistakes
  • Ideal approach and possibilities to influence residual value performance
depreciation is the biggest cost block during owning a car example german market
Depreciation is the biggest cost block during owning a car … Example German market …

Cars up to 180 PS

Cars up to 130 PS

Source: Autoflotte Germany

slide10

20,9 % in trade in

0,75:1

… and individual Depreciation has a significant impact on the Leasing attractiveness …

... example

agenda11
Agenda
  • Introduction EurotaxGlass`s
  • Motivation – why residual value and risk management ?
  • Two most common mistakes
  • Ideal approach and possibilities to influence residual value performance
slide12

The most common two mistakes when setting contract residual values

  • Relying on Fair Market Values While Not Analyzing Actual Selling Prices
  • Relying on Selling Performance While Not Analyzing Market Dynamics
  • THE BEST PREDICTIVE APPROACH COMBINES
    • USED CAR MARKET UNDERSTANDING
    • OWN RE-MARKETING KNOWLEDGE
slide13

Ignoring Actual Selling Prices DistributionExample…

Contract: 3 years / 120.000 km

RV Calculated as per Market Reference: € 9.045 (incl. Options)

RV Calculated as per Market Reference: € 8.640 (excl. Options)

Remarketing performance normally is 100%

However if you analyse the latest sells of the same vehicle - WITHOUT options it sells around € 8.000

FEATURING all of the options it sells around € 10.000 !

Pricing Gap

Potential Loss

Contract RV Excl. Options

Contract RV Incl. Options

€ 10.000

€ 8.000

Actual Selling Prices Span (Distribution)

however the difference is no mistake nor on purpose it is simply unavoidable

Match

However the difference is no mistake nor on purpose – it is simply unavoidable

Actual sales result depends on :

External market benchmark

depends on :

  • Make
  • Model
  • Technical data
  • Age
  • Mileage
  • Moment of Sale
  • Equipment value
  • Equipment type and combination
  • Exterior colour
  • Interior colour and materials
  • Exterior and Interior combination
  • General condition
  • Channel through which sold
  • Sales Person
  • Buyer needs (stated or not)
  • Concentration on parking lot
  • Time pressure to sell/buy
  • Special deals and agreements
  • Make
  • Model
  • Technical data
  • Age
  • Mileage
  • Moment of Sale
  • Equipment value
  • Average colour
  • Average condition
  • Average dealer retail/ trade in
  • Average sales person
  • Average buyer needs
  • Domestic market only

Miss-

match

market dynamics influencing residual values overview
Market dynamics influencing residual values: Overview

1.Supply & demand

8. Life cycle position

2. Distribution strategy, marketing, pricing & discount policy

%

3. Configuration strategy & policy, standard & optional equipment

7. Fulfilment of expectations

4. Segment allocation, communication of benefits

6. Image

5. Design, communication of values

influence of image example toyota yaris starlet
Influence of Image: Example Toyota Yaris / Starlet

Backup

ADAC AutoMarxX 2005

ADAC AutoMarxX 2002

TOP 3:German premiums

Rising star:Toyota

LaunchToyota Yaris

Toyota

Starlet

Improvement

Also impacts

RV´s

agenda19
Agenda
  • Introduction EurotaxGlass`s
  • Motivation – why residual value and risk management ?
  • Two most common mistakes
  • Ideal approach and possibilities to influence residual value performance
residual value and risk analysis ideal approach
Residual value and Risk Analysis – Ideal Approach

Data

Analysis

Market benchmark (external source)

Hist. Benchmark (external source)

Relation – own sales to Benchmark

Adjust for Individual performance

Adjust for excess mileage rates, etc.

Hist. sales results (internal)

Contract values

Difference: Contract values vs. adjusted forecasts

RV risk exposure

example of risk analysis
Example of Risk Analysis
  • FORD MONDEO 5DR HATCH 1.8i ZETEC, UK Market
influencing rv s from the leasing companies perspective

Supply

Demand

Price

Quantity

Influencing RV’s From the Leasing Companies’ Perspective

Influencing RVs … … or Maximizing Re-Sale Value and Remarketing Performance ?

  • Influencing the Market ?
  • Not possible for all players
  • Very large volumes, nearly monopolistic situations
  • May have a certain cost and bear significant risks
  • Making the Most of the Market ?
  • Flexible, cost effective strategies
  • Process and performance based
  • Can be implemented at all levels of the business
influencing rv s from the leasing companies perspective23
Influencing RV’s From the Leasing Companies’ Perspective

Maximizing Re-Sale Value and Remarketing Performance

Understand drivers of used car selling prices

MARKET(S)

VEHICLES INDIVIDUAL FEATURES

SELLING PROCESSES

Identify drivers with maximum impact

INVOLVE IN-HOUSE EXPERTS

USE BENCHMARK

Select drivers t.b. operated at sensible cost

ANALYTICS NEEDED

DO THE HOMEWORK

Take action !

CREATE BUSINESS AWARENESS

ALIGN OBJECTIVES

influencing rv s from the leasing companies perspective24
Influencing RV’s From the Leasing Companies’ Perspective

1. Understand ALL the drivers affecting used car selling prices

  • Make
  • Model
  • Technical data
  • Age
  • Mileage
  • Moment of Sale
  • Equipment value (not just worth)
  • Equipment type and combination
  • Exterior colour
  • Interior colour and materials
  • Exterior and Interior combination
influencing rv s from the leasing companies perspective25
Influencing RV’s From the Leasing Companies’ Perspective

1. Understand ALL the drivers affecting used car selling prices

  • General condition of cars
  • Presentation
  • Concentration on parking lot
  • Sales People
  • Buyer needs (stated or not)
  • Weather
  • Time pressure to sell/buy
  • Channel through which sold
  • Special deals and agreements

Re-Marketing Experience is a major asset… in relation with adaquatemarket benchmarks

influencing rv s from the leasing companies perspective example options
Influencing RV’s From the Leasing Companies’ Perspective Example – options

Audi A4 Avant 1.9 TDI

BMW 320 D touring

MB C220 CDI

Passat 1.9 TDI

Price new

28.730

29.650

31.505

26.375

Metallic

630

670

806

465

Lether

3.950

1.990

1.850

1.990

AC

serie

serie

1.636

serie

Sun roof

920

950

1.172

860

RV Basis

14.950

15.250

17.950

12.600

RV total

16.100

16.050

19.550

13.350

Already few extras can increase used car value strongly

Quelle: Eurotax Händlereinkaufswerte 36 monate, 120 tsd KM

but keep in mind options have different depreciation behaviour
… But keep in mind - options have different depreciation behaviour

Depreciation with diferent Desirabilties

Depreciation, Basic car and desirability cluster 1

RV in %

Depreciation options Desirability cluster 7

36

Age in Months

Significant Differences in the RV dependent on desirability of options

Quelle: Eurotax

influencing rv s from the leasing companies perspective29
Influencing RV’s From the Leasing Companies’ Perspective

3. Select drivers that can be operated at sensible cost

e.g. 1. – Can we consider promoting certain car configurations ?

e.g. 2. – Should we recondition terminated vehicles?

e.g. 3. – Is a showroom a good investment ?

e.g. 4 – How to motivate driver to purchase at the end of lease ?

Cost / Benefit Analysis

influencing rv s from the leasing companies perspective30
Influencing RV’s From the Leasing Companies’ Perspective

4. Take action !

Involve people on the job …

Look at cross-functional impacts

e.g. – How to set-up a deal for a large number of the exact same model ?

REMARKETING

SALES

SOURCING

  • Make
  • Model
  • Fleet Concentration
  • Required Equipment
  • Exterior colour
  • Interior colour and materials
  • Buy-back negociations
  • Make
  • Model
  • Age
  • Mileage
  • Equipment types and value
  • Fleet run-off profiles
  • Vehicle re-conditioning
  • Concentration / parking lot
  • Sales Talent
  • Moment of Sale

Align Cross-Functional Objectives