This new contract heralds the UK’s largest fleet of new vehicles, following a successful pilot programme over the past six months and sees Bluecycle entering the fleet sector for the first time.

At a time when many businesses  are facing an uncertain future, Bluecycle have bucked the trend with their aggressive growth strategy and new partnership with Motability Operations. The entry into the fleet sector complements Bluecycle’s lean business model within the salvage industry.

Bluecycle holds more than 1,000 online auctions each week, specialising in automotive and commercial plant salvage and as a stand-alone business has developed steadily upwards with 2008 seeing it handling in excess of 80,000 vehicles.

Guy Spence, Managing Director of Bluecycle is the driving force behind the company’s diversification and recent addition of Nick Leyland, previously Commercial Director at leading online motor retailer, Motorlogix, to the senior team. Mr Leyland brings more than twenty years’ experience in automotive, finance, leasing and operational roles to the table.

Commenting on the new partnership with Motability Operations and the strengthening of his management team, Guy Spence said:

“Our new partnership with Motability Operations is a major step forward for Bluecycle and a testament to the online business model we’ve worked hard to develop. In this testing economic climate, returning value to our customers through a process which is truly integrated, secure and hassle-free remains the focus of our endeavours.  We’ve set the bar pretty high and have some exciting developments in the pipeline, which will further strengthen our market position.”

The new network, set to become operational next month, could save fuel costs totalling more than £325,000*and nearly 3,500 working days by cutting miles driven from 2 million to 1.29m.

It will also reduce Bluecycle’s carbon footprint by at least 810 tonnes of CO2 through the 36% reduction in miles covered by salvage operators.

James Russell, managing director of Bluecycle, said: "To maintain a sustainable, profitable and competitive salvage business, it’s vital to review and tackle the thorny issue of moving vehicles around.

"Working with the London School of Economics**, whose research has helped us to re-engineer our logistics network, we have been able to pinpoint ways of bringing costs down and work more efficiently through intelligent planning."

The new Bluecycle network is based on determining the most suitably located salvage yards across a number of UK "territories" and optimising the time and distance taken picking up vehicles.

This is just one of the findings from the company’s study of over 75,000 online auctions, which reveals the psychology behind maximising the value of salvage.

Although only 24% of Bluecycle’s auctions happen over a three-day period, results show that vehicles featured in those auctions receive twice the level of return than those vehicles auctioned over a two-day period.

Findings also reveal that the make of the vehicle, the amount of damage to a vehicle and whether keys are available, are all important to buyers and directly affect how much they are willing to bid.

Bluecycle also found that most bids are placed between 8am and 11am, with even greater weighting between 9am and 10am. Wednesdays appear to be the most popular day for auction activity, with the highest average number of bids per day.

The type of fuel a vehicle uses also has an impact on auction activity with diesel powered vehicles achieving higher returns than LPG or petrol powered vehicles.

Another finding recommends extending auctions past their official closing time if there is a bid in the last minute. This period, known as ‘auto-extension’, extends until there is a one-minute segment in which no bids are placed and helps to increase returns on vehicles. An example of this was seen in the recent auction of a Nissan 350Z. The official close time was 10.18am by which time the car had reached £8,200. Auto-extension came into play and the vehicle finally closed at 10:30 at £9,570 – a 17% increase in returns.

Piers Wilson, head of market development for Bluecycle, said: “The purpose of the research was to better understand the dynamics of our auctions and gain even further insight in to the way our buyers and sellers trade.

“Quite simply, the cost of storing a vehicle over a certain period of time is much higher than sending a vehicle straight to auction. Considering key variables that influence activity, such as extending auctions for longer periods, can help sellers not just to dispose of a vehicle but achieve highest possible returns.

“The auction dynamics study has been such a success that we will look to test and review concise recommendations for sellers and commission further analysis on a quarterly basis, helping us achieve our aim to provide the best possible experience for our customers.”

Following a survey of Bluecycle customers, 60% said that salvage repair was at the core of their business and they would welcome a recycled parts service from Bluecycle.

A recycled parts pilot was launched in February, which integrates the Bluecycle website directly to partner company Actual Systems’ parts database. From here, customers can access an inventory of over 450,000 recycled and remanufactured parts, such as engines, gearboxes as well as cosmetic elements.

During the first 48 hours, over 2,500 individual part requests were received, and 12 suppliers registered their interest to be involved in future developments.

Paul Williams, business development executive at Bluecycle says: "By purchasing recycled parts, customers can save between 30% and 80% on the cost of the retail value of a new part. Plus, having all parts in one place saves a great deal of time shopping around.

"Also, our new service is in line with the European ELV (End of Life Vehicle) Directive. A key statement of the Directive says that by 2015, a reuse and recovery target of 95% will apply to all vehicles at the end of their life".

With high market demand for this model and less than 300 miles on the clock, Bluecycle weren’t surprised when in just two hours, bids reached the estimated auction sale price of £42,000, which continued to increase.

Bluecycle promoted the vehicle to all customers, with a specific focus on Bentley buyers, specialists and traders seeking this particular model, leading to a closing bid of £67,520, exceeding return by almost £25,000.

"We knew that by targeting the right customers we could create a really hot auction and exceed our expected return. The auction received nearly 700 bids, making it the highest-ever achieving Bentley in a Bluecycle auction," said Piers Wilson, head of market development for Bluecycle.