No end of contract charges; no excess mileage charges, just paying what you should be paying at any point in time.
It sounds like some sort of fleet funding nirvana, but is being delivered via a ‘matrix’ leasing platform from Fleet Logistics UK (FLUK).
The Birmingham-based fleet management provider, part of a global business managing 180,000-plus vehicles, gives access to a panel of funders through a framework agreement and a multi-bid platform.
The grid, or matrix, is divided according to contract length and mileage, explains Sue Branston, country head of Fleet Logistics UK and Ireland.
“The term is across the top and mileage down the side. The term will be in three-month increments and the mileage will be in 5,000-mile increments, and every point on that grid will be filled in by the lease co. (with an appropriate rental rate).”
The process also allows customer discounts, which have been negotiated with manufacturers, to be taken into account and, following the setting up of a network of supplying dealers, there is further potential for cost saving and price reduction.
Determining the winner
The customer selects the size of the panel in consultation with FLUK, says Branston, while the system determines the winner.
“That then becomes the ‘bible’ for that particular car so at any point during the life of the vehicle, we can look at the mileage and the term, and if it’s not right, we can change the contract.”
Contracts are reviewed on an annual basis, which she says “negates the lease co. from having to apply a mileage excess or early termination charges – it just cuts it out”.
Interventions by the fleet management company have so far this year saved its UK customer base more than £1.3 million, rising to £4.5m over the past three years.
Meanwhile, by pitching one leasing company against another through its multi-bid platform, FLUK says it is delivering fleets a monthly saving, on average, of £35 per vehicle – an 18% increase in the past two years.
The leasing company effectively becomes the banker in FLUK’s model. “They don’t need to factor into their quotations such things as account management or other back office support functions, because it’s our customer, we service the customer,” explains Branston.
FLUK is in charge of the relationship and has its point of contact with each leasing company. Its revenue is delivered via a monthly fee charged to customers on a per vehicle basis, dependent on the fleet management services selected.
“We’re an extension of their business,” says Branston, “that’s why it’s different from the broker model.”
Branston explains that she would “never advocate” unbundling service, maintenance and repair from the lease, because the leasing companies have “very good buying power and they are spreading the cost over the term so it makes sense to keep that with finance”.
Instead, she says: “We advocate unbundling other services, which they (the leasing companies)don’t do themselves, like accident management, rental, fuel management, mileage capture and telematics.
“Contract directly with the people who are really providing the service. Our customers contract directly with the supply chain, we manage the vendor, we manage their SLAs (service level agreements) and we see all the invoices so we can validate them against the agreed tariff.
“We’re an enabler. We may not fulfil the service ourselves, but we enable it to happen. For example, we’re not a fuel card provider, but we will work with a client, we will research the market and identify the players.”
A switch in fuel card provider for one customer, facilitated by FLUK, enabled benchmark savings of £120,000.
Branston says FLUK has two key areas of focus; one is the front end that administers policy, deals with the drivers and key stakeholders and the other is the back end, the invoice validation team.
“It’s about adding value. We’re enabling; we’re policing and showing the value (to our customers) continuously,” she explains.
In the UK, the company manages 11,500 vehicles, with the lion’s share of its customers also operating cars and vans in other countries through its international fleet management division.
Its UK-only customer base currently stands at 13%, but Branston is keen to double that to a quarter of her overall fleet within the next two years.
Branston believes companies need to take a longer-term view in a constantly-evolving fleet market to achieve a more sustainable future, and consider the advantages of a partner focused purely on fleet.
“Fleet is transforming and having a partner with expertise in every market your business operates in is a key factor in controlling spend,” she says.
“A fleet management company can help realise untapped potential in the fleet supply chain and work with you to develop your sourcing strategy in each market.
“Selecting the best services, to meet your business’ individual list of requirements, will improve processes and reduce admin and manage your fleet suppliers and their costs. This frees up time and resource within your business.”
Branston has worked in the fleet industry for more than 30 years, with senior roles at the likes of Velo, Autolease, Dial Contracts, LeasePlan and Masterlease, but says she has never known change like that seen in the past two years.
It is a level of uncertainty which, with fleets looking for guidance, provides FLUK with an opportunity, she says, adding: “Our methods work well with the current uncertainty and the benefits are seen in the bottom line by a business.
“By supporting our clients to tender for the best fleet supply chain, either alongside their internal teams or on their behalf, we help them select the best providers.
“This can work better than employing a ‘one-stop shop’ approach and being tied to a sole service provider for all fleet services, when not all services may continue to be cost-effective or best-in-class mid-to-long term.”
She continues: “Partnering with a fleet management supplier that is completely transparent and impartial in its dealing with your fleet suppliers, can really benefit both a business and its drivers.”
'Business as usual'
Volkswagen Financial Services (VWFS) bought a 60% stake in Fleet Logistics earlier this year.
The remaining 40% of the company’s shares are held by the former sole shareholder TÜV SÜD Auto Service GmbH, headquartered in Munich, a wholly-owned subsidiary of TÜV SÜD AG.
Lars Henner Santelmann, chairman of the VWFS management board, said the “strong international focus” of Fleet Logistics complemented its own “global financial services activities”.
The shareholders agreed to maintain the brand neutrality of Fleet Logistics. Branston told Fleet News: “It is business as usual. We’re independent and we’ll maintain that independent stance.
“There are some synergies in Germany and I’m sure in time we in the UK will draw on their expertise that may add value to our customer base.”