A new car in a showroom differs from a car on the road by more than mileage. Legally and economically they are different valuation objects: on the dealer's lot the vehicle is stock held for resale, not a fixed asset in operation. That single distinction drives everything — the basis of value, the content of the report and who needs it. The Kanzas company appraises new-vehicle inventories of Ukrainian dealers and importers for bank collateral, financial reporting and corporate transactions.
Stock, not a fixed asset: the fork that defines the methodology
A vehicle acquired by a dealer for resale is carried as inventory: it is not depreciated, not revalued as a fixed asset and has no "residual value" in the accounting sense. The same physical object is valued differently depending on whose books it sits on:
- the vehicle as stock — a dealer's inventory unit, appraised within the batch, with the basis of value tied to conditions of sale, model liquidity and turnover period;
- the vehicle as a fixed asset — a company's service car, appraised as an individual unit with service life and depreciation.
The first thing the appraiser establishes is which account the car sits on. And a separate distinction for owners: appraising the dealer's vehicle stock is not the same as valuing the dealership as a business — for the enterprise as a whole, see business valuation.
Floor plan collateral: dealer inventory as bank security
Dealers finance themselves against their stock — what US lenders call floor plan financing and UK lenders call stocking finance. The bank takes the vehicles on the lot and in the showroom as collateral for a revolving facility: units are sold, new ones arrive, and the security must hold its agreed level throughout. Three things are critical to the lender, and the report answers all three:
- unit-by-unit identification by VIN — the pledge only works against specific vehicles;
- liquidity of each model — the gap between a fast-moving position and a "heavy" one within the same stock can be multiple, and an average figure hides the risk;
- turnover period — a car standing on the lot into its second year has already lost part of its value at zero mileage.
A vehicle loses part of its value at the moment of first registration, regardless of mileage — which is why unregistered stock and the same models after registration appraise differently, and lenders account for it.
IFRS reporting and corporate transactions
The valuation report on dealer inventory also serves:
- fair value measurement of inventories for financial statements under international standards — a routine requirement for foreign-owned importers reporting to a parent group;
- write-downs of stock that has lost liquidity or marketable condition;
- contribution of vehicles in kind to a company's share capital;
- sales of vehicle batches between related parties — with support for the arm's length level of pricing;
- reorganisations, sale of the dealership business, exit of a shareholder.
Appraised value is not customs value
A distinction worth making at once for importers. The customs value of imported vehicles is determined under the Customs Code of Ukraine during customs clearance, and the appraiser does not set it. A valuation report establishes the market value of the vehicles at a given date for civil, banking and accounting purposes. Different figures, different procedures, different actors — we do not take on work that lies outside valuation practice.
What drives the value of new vehicles in dealer stock
- model, trim, engine and transmission — the spread within one model line can be substantial;
- model year: last year's model is cheaper than a physically identical current one;
- liquidity of the position on the Ukrainian market and demand for the specific configuration;
- time on the lot, storage corrosion, paintwork condition after prolonged outdoor storage;
- warranty coverage, completeness of documents and manufacturer support;
- supply terms and the official status of the import channel.
Practice: automotive importers among our clients
Automotive distribution is a sector we work with beyond appraisal alone. The company's transfer pricing clients include importers of vehicles and spare parts: in those engagements we analyse pricing in related-party transactions and support the arm's length level of prices. That work gives us a working knowledge of the cost and margin structure of the dealer link — the part that is invisible in a price list and directly affects what the stock on the lot is worth.
Inspection and documents
Physical inspection and identification of the vehicles by the appraiser is mandatory under Ukrainian valuation law. For a dealer stock this means visiting the lot, reconciling VINs against the accounting records and photographing the units. The company's regional representatives inspect lots and showrooms across Ukraine — relevant for foreign-owned groups whose Ukrainian dealer network spans several cities.
Documents: the vehicle list with make, model, trim, model year and VIN per unit; acquisition cost and booking date per unit; supply contracts and import documents; corporate documents of the Ukrainian entity; where relevant — the facility agreement or the bank's report requirements.
Questions and answers
Can the entire dealer stock be appraised in one report? Yes — one report covering the batch, with each vehicle identified by VIN. It is precisely the unit-by-unit identification that makes the report usable for perfecting the pledge.
Does every vehicle on the lot need to be inspected? Yes. Inspection and identification are mandatory, and for collateral they are critical: the lender must know that every unit on the list exists and matches its description.
Why is last year's model year cheaper if the car is new? Because the market prices the model year, not the odometer — and prolonged storage adds its own effect on condition. The report accounts for both.
Do you determine the customs value of imported vehicles? No. Customs value is determined under the Customs Code of Ukraine during clearance. We determine market value for civil, banking and accounting purposes.
How much does a dealer inventory appraisal cost? The fee and timeline depend on the number of units, the number of locations and the purpose. We quote after receiving the vehicle list with specifications; a fixed fee and inspection schedule are confirmed before the engagement letter is signed.
Send the vehicle list and the purpose of the appraisal to [email protected] — we will assess the scope, agree the schedule of lot inspections and quote a fixed fee.
Related services: Valuation for lending · Valuation for IFRS reporting · Transfer pricing · Fixed asset revaluation
