F&I Management & Training

The fleet industry could be sitting on a residual value timebomb because some leasing companies are over-estimating the future values of their cars. Many leasing firms are still using the record used values of the last 24 months as a guide to what will happen in the next couple of years. However, rising interest rates could lead to less used car buying activity, affecting leasing firms' financial results which, in turn, will lead to higher leasing rates for fleet customers. Ian Tilbrook, managing director of ING Car Lease, said: 'Fleets want competitive prices but also continuity of pricing and the actions of some leasing firms are a danger to that. 'This practice of setting inflated residual values could be extremely damaging to the sector, particularly at a time when money markets are in turmoil and there is a distinct lack of clarity as to the highs and lows of interest rates and inflation.

DATED: 25.08.07

FEED: AW