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'Little and large' vehicle funding works for PD Hook

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Sole supply or multi-supply: it’s the choice presented to fleets ever since contract hire became the dominant funding method more than 20 years ago.

PD Hooks opts for dual supply for its cars and vans, sense-checking the funding quotes of one leasing company against another. Nothing unusual there, of course – it’s the most commonplace policy.

What is different, though, is the companies involved: the UK’s biggest leasing provider Lex Autolease and a local company yet to enter the FN50, Fleet & Distribution Management Ltd (FDML).

While most fleets pitch similarly sized leasing companies against each other, for PD Hook it’s a case of “little and large”,  says administration and technical director Nigel Boyle.

The two extremes provide the ultimate contrast between a national heavyweight, with its unrivalled purchasing power and extensive resources, and a local business, with its ability to focus on customer service and accessibility.

Consequently, you might expect that Lex Autolease would win in a straight fight on leasing prices. Not so.

True, the company did, until a year ago, account for 75% of PD Hook’s car and van fleet. However, today the share of business is evenly split and, within a year, Boyle expects FDML to account for three-quarters of the fleet – it is currently winning 90% of new business with the quote differential varying from a saving of £2 a month to as much as £60 a month.

FDML was brought into the business approximately two years ago by Boyle,  primarily to offer a price check against Lex Autolease, with which PD Hook had been leasing since before the merger between Lex and Lloyds Autolease.

The gap in quotes quickly narrowed and the additional level of flexibility and “tremendous customer service” from dealing with a company down the road from PD Hook’s head office gave FDML the edge.

Factfile

Company: PD Hook
Administration and technical director: Nigel Boyle
Fleet size: 500 assets, incl. 63 cars, 90 vans, 172 trucks
Funding method: Contract hire
Operating cycle: Cars – two-to-four years/120,000 miles; vans - five years/120,000 miles; trucks – seven years
Brands: Cars – Audi, Nissan, Skoda, Volkswagen, Volvo vans – Volkswagen and Vauxhall

Boyle cites an example: “Big companies have routine processes for de-fleet; local ones go to local businesses so they don’t have set charges for wings and bonnets. It might not be as consistent, but the prices are consistently lower.”

The company’s truck fleet is also dual-funded. Fraikin accounts for most of the  67 hatchery lorries, which are expensive custom-built vehicles, while CVS finances the tractor units for the chick growing division.

Oxfordshire-based PD Hook is one of the UK’s largest hatchery operations, in terms of market share, with 10 UK offices and more than 400 farms spread across the UK. Boyle joined the business almost 20 years ago when it employed just 35 people.

Today its fleet totals 63 cars, 90 vans and 172 trucks. With tractors and forklifts, the number of assets exceeds 500. On top of that is a grey fleet of around 1,800 people, all of whom sign a declaration if they are going to drive for the company and have their licences checked annually.

PD Hook sorts out business insurance; it’s the only way it can be sure that everyone is fully covered.

“We were caught out once with someone without business insurance,” Boyle says. “Now we know that everyone is insured to drive.”

Office manager Nicole Souch, part of the fleet team, adds: “Cost isn’t the issue; it’s having the knowledge that they will be compliant. If they are a driver and they have a car, we assume they might drive for business.”

The fleet expanded by 100 cars and vans a year ago through acquisition. The new vehicles were a jumble of lease and outright purchase with more than 20 funders, some with maintenance, some without, and no real control on mileage contracts.

“It was messy,” says Boyle. “They selected their leasing company on the cheapest one but this meant they didn’t get the benefits of pooled mileage, good relationships or a consistent price. We are slowly bringing it together. By the end of summer, everything will be on our fleet policy.”

That fleet policy is also seeing PD Hook move cash takers, typically area managers, into company cars. In some instances, it has novated personal leases via FDML – another example of the local funder’s capacity to provide unusual solutions.

The reason for the change in policy is two-fold: cost and risk. Its car fleet is high mileage, averaging 40,000 a year, and both cost and risk are easier to control when the cars are sat within the company scheme.

There was some initial resistance from staff with their own cars but mass mail communications, regular meetings and a phased changeover helped to alleviate any major protests.

“Our biggest challenge that has evolved over the past five years is corporate manslaughter and compliance,” Boyle says. “We have set up a system for licence checking and DVLA mandates which we do in-house. The bottom line is you can’t do too much to ensure compliance.”

"Our biggest challenge that has evolved over the past five years is corporate manslaughter and compliance"

Nigel Boyle, administration and technical manager, PD Hook

All drivers with six points on their licence go on a training course, while PD Hook brings in external speakers to talk about safety issues, pressing home key messages.

It has also reduced the number of agency drivers used on the truck fleet due to the specialist nature of its loads. As Boyle puts it: “You have to know how to drive with livestock on board.”

A number of other employees have been trained to provide cover as and when required. This includes welfare training for livestock – safety takes on a new meaning when you are transporting live animals.

Truck best practice cascades down to the van and car fleet. For example, fleet policy states that non-HGV drivers are required to rest every two hours, irrespective of which type of vehicle they are driving, while daily checks are carried out to ensure vehicles are roadworthy.

Tyres on all vehicles are swapped for cold-weather rubbers during the winter months. Boyle describes their performance as “remarkable”, adding: “We decided it was worth the cost to keep people safe while doing their work.”

Kwik-Fit stores the tyres in its ‘hotel’ with the cost bundled up in the contract hire rate. Each winter tyre lasts around three years which means most vehicles do not require more than one set during their operating cycle. It takes around an hour to replace a full set, although drivers can work while they wait, says Boyle.

The next safety initiative under consideration is front-facing cameras. They are being trialled in two cars and the results have been positive so far with a clear improvement in driver behaviour. As the cost per unit comes down, it is likely that these cameras will be introduced, at least for drivers who have been involved in accidents.

Telematics is already installed in the truck fleet primarily as location trackers, although the data also enables PD Hook to monitor driver behaviour and fuel economy. When vehicles are only achieving 8mpg, any improvement is significant. Boyle has an option to roll out the system to vans and cars.

Fuel cost has been brought into sharper focus with the introduction of Euro 6 engines on all new trucks last year. Not only do the trucks cost more to procure – adding £10,000 to a £120,000 truck on average – but fuel consumption is slightly worse and they use more AdBlue than Euro 5.

PD Hook has bunkered tanks for AdBlue and its trucks usually top up every time they fill up with fuel (its major sites have fuel bunkers, which supplement the fuel cards). It is likely to open up AdBlue access to vans and cars when they fall under the Euro 6 regulations over the next 16 months.

Total cost of ownership is closely monitored by the fleet team (see panel right), which has resulted in a number of adjustments to fleet policy. Car and van replacement cycles have been reduced from 150,000 miles to 120,000 after downtime analysis revealed a spike  in vehicles off-road above the 120,000 threshold. It has resulted in lower maintenance costs, improved fleet utilisation and fewer daily rentals.

Boyle has also reduced the monthly allowed figure on new contract hires after he discovered that many standard specification vehicles were coming in below the maximum cap, but staff were adding extras to bring them up to their limit.

“Engines are more efficient, reliability is better and running costs are lower, so the leasing rate is less,” Boyle says. “We reduced the contract hire limit by £50 per month on two categories. Times by 60 cars, and that’s a significant saving. The limit could possibly go lower still.”

Analysis of the fleet is carried out via PD Hook’s own fleet management system. The custom-written database contains all information about vehicles and drivers.

Driver tabs detail driving offences, training history, endorsements, signed mandates for licence checking and insurance records, while the vehicle database includes new orders, monthly mileage stats, finance, SMR, winter tyre records, O-Licences and leasing contracts. All documents are attached for instant retrieval.

“When we were a small company, we did not need a fleet management system so we started developing one that suited us then and we have evolved it as we went along,” Boyle explains. “We’ve had it for around 15 years and it means we have all the facts about the fleet at our fingertips.”

In-house control is ‘cost-effective’

PD Hook has a fleet team of five which enables it to carry out the majority of functions in-house.

Led by administration and technical director Nigel Boyle, it comprises Nicole Souch and Abi Downer, who handles day-to-day contact with leasing companies, daily rentals, vehicle orders and fuel cards;  Ali Douglas, who handles HGV administation; and Michelle Hickman, who looks after driver licence and grey fleet compliance.

Each hub has a transport manager with responsibility for the trucks. The company operates on a restricted O-Licence, so it is not required to have someone with  a Certificate of Professional Competence at each depot.

Boyle says: “We tend to do everything in-house, except financing and SMR, because it is cost-effective and gives us better control. When we brought driver licence checks in-house it halved the cost. There is also a time benefit – we can do instant checks which is key when you have so many staff and staff changes.

“With accident management we deal with the claims and the admin. Our insurer NFU does the claims reporting.”

Souch adds: “We are very hands-on. We are confident that we are running a compliant fleet including checking leasing company records, for example tax records.”

Boyle says the philosophy is  to “gold-plate it so we know it has  been done”.

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