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Medium/Large Cars Become an Asset Liability



Immediate Release

Medium/Large Cars Become an Asset Liability

Having just experienced the greatest one day jump in world oil prices, there is more pressure than ever on asset values for medium and especially large cars when they are sold into the second hand vehicle market.

And now with mid-year arriving, it's an appropriate time for many corporate fleet and finance managers to reassess the actual market value of their fleets.

New Zealand's leading vehicle valuations company, trading as The Red Book, says that there is much activity at this time of the year, a time the company is inundated with requests from corporates for vehicle fleet valuations.

"Now with such huge pressures on the values of larger cars, nothing is what we thought it would be just 12 months ago. We have seen a significant increase in companies contacting us as an independent source to value their auto assets", says Red Book's Richard Reid.

He adds: "It may be simply a case of asset valuing for accounting purposes, but it can also be around reducing insurance premiums and checking portfolio value as a process of financial due diligence".

As an indicator, the new car sales charts have recently seen the larger Commodore model slip from top place to be replaced by the much smaller Corolla.

Even though the market is going through a time of adjustment, there will always be a reasonable demand for the larger cars as they represent such good value. It does not appear to be a time for doom and gloom, it's simply a time for a shift in values, and that's where the asset managers need to be cautious.


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