Step 7 In-house expertise

One reason why Home Retail Group outright purchases its fleet is that it has the expertise within its fleet team to handle vehicle disposal.

Weston says the company achieves good residual values on its cars and it is a “profit stream to the business”.

However, having the right data to work out when each vehicle can be sold at a profit is crucial.

“If you don’t have confidence in generating and managing the data, outright purchase can be very daunting,” he says.

Other companies, such as AstraZeneca (see case study), hand disposal to their fleet management provider.

Step 8 Look at services

“Companies often forget that a huge part of contract hire is the provision of services,” Rawlings says.

“And leasing companies will all offer different levels of service, computer technology and systems.”

Combining maintenance with contract hire is popular as a company will have fixed maintenance costs.

However, some companies believe they achieve savings from a pay-as-you-go approach rather than effectively paying upfront for repairs before they happen.

Manage the fleet well and the bill – when it comes –should be smaller.

Again, this links into the company’s attitude to risk.

Graham found it preferable to include maintenance and accident management in a contract hire agreement in order to manage vehicle down-time effectively.

While services are a valuable part of contract hire, companies also need to consider whether they are “buying unnecessary services”, according to Rawlings.

Step 9 multi-funding

Many companies choose to contract hire cars and buy vans but this could be taken a step further with three or more funding methods.

For instance, some vans may be suited to a long term rental depending on use – an approach which the Environment Agency has recently adopted (see case study) - while on the car fleet companies may combine contract hire for job-need drivers and an ECO scheme for perk drivers.

“We advise companies to review a mixed approach as this can lead to a more cost-effective solution for some businesses, particularly where they have a variety of different drivers (high/low mileage, business need/perk),” Hughes says.

“Where the profile is less varied a single approach may be best.”

Change to capital allowances announced in the Budget could lead to a growth in blended solutions (see www.fleetnews.co.uk/budget-blended-solutions/)

However, having more than one funding method may bring increased administration and some companies favour the simplicity of a single approach.