Residual values management

• Buying vehicles then selling them to lease can give some commercial vehicle fleets flexibility
• End of life contract charges can cause pain, although charging individual users can help cover costs
• Profit sharing can benefit both parties – if a vehicle is remarketed and gains a higher price both the contract hire company and the fleet gain
• Most of the time the charges are not used to repair the vehicle – the leasing company will just that the hit on the vehicle when it’s auctioned
•  Agree an average for cost of condition or budget for end of contract charges
• Leasing companies should agree with customers not to make a profit from end of life charges – it seems to be a profitable activity at present
• Although there is a template for fair wear and tear, a structured rate for repair and refurbishment could be useful. Would lead to greater transparency
• When you manage your own accidents you get to know the cost of repair, and these are often out of step with damage recharges. Check vehicle condition weekly and charge repairs to cost centres where possible
• Some fleets have been charged for damage to rental vehicle, but have rented the same vehicles later with the damage still evident
• It’s more difficult to incentivise drivers in LCV fleets where vans would have a number of different drivers – lack of a sense of ‘ownership’ among drivers
• Perhaps CAP should compile a rate card for damage beyond ‘clean’, ‘average’ and ‘poor’.
• If telematics can help track driver behaviour it can allow the right questions to be asked and improve behaviour and reduce damage