Spiralling fleet costs and a lack of management influence has seen Yorkshire Housing switch its funding method from contract hire with full maintenance to outright purchase and in-house control.
Experienced fleet manager Stuart Wiseman joined the social housing organisation two years ago with a remit to review both fleet policy and the incumbent leasing provider.
“When I joined there was a lack of fleet experience within the organisation to manage the fleet management company,” he says.
All 150 light commercial vehicles were on a three-year contract, but Wiseman quickly identified anomalies.
“We paid 39 months: three months up front and then 36 months, so we were paying more than we needed,” he says.
“We also had high refurbishment costs of between £1,500 and £2,000 per vehicle.”
Other invoices contained details of damage charges for rep-airs the company knew nothing about. Something had to change.
Given these circumstances, most fleets might simply consider a change of leasing company.
However, after a wide-ranging assessment, Wiseman decided on a more radical form of action: a change of funding method.
At the same time, he reviewed the vehicle policy, running a mini tender based on wholelife costs through the Buying Solutions procurement programme; Ford came out top.
“We looked at different leasing companies to compare costs versus outright purchase and our cost analysis showed that, in year one, we would make £80,000 of savings by outright purchase through Buying Solutions,” Wiseman says.
“There were significant savings to be made.”
The operating cycle has moved out to five years or 80,000 miles; Wiseman believes this is a better fit for the business – and a cheaper one – based on typical usage and annual mileage.
“Over five years we expect to save £1.5 million,” he says.
“We have residual values control and lower SMR because we use Ford fleet pricing. We now know what we are paying on pence per mile.”
He adds: “It’s all about control. We control how long we keep the vehicle, what we use it for, whether we repair scratches and whether we send it to auction.
"The risk is residual values; we’ve set them around 20% and we have been exceeding that on the old vans we have sold – and they were messy.”
The first vans were ordered in January 2012; just over 70 have been replaced so far, with the balance due to change over the course of this year.