Fleet News

Insight: Uncovering the cost of switching leasing providers

Research from Fleet News sister company Sewells shows that a growing number of fleets are considering changing their leasing provider, driven by the need to search out greater savings and value-for-money partnerships.

A Fleet News poll (see page 40) backs this: 35% of fleets have either changed leasing provider within the past two years or are in the process of changing.

However, companies often fail to consider the cost, both in time and resource, of switching leasing providers.

Projects involving several thousand vehicles could take 6-12 months to complete, say experts.

Some companies have circumvented the need to regularly re-tender by signing longer lease contracts – five- or even seven-year deals. This might include a review after three or five years, thereby providing a get-out clause.

Julie Jenner, chairman of ACFO and key solutions manager at GE Capital Fleet Services, advises companies to make sure they are switching for the right reasons.

“It’s a huge amount of work to change,” she says. “How much time will you have to invest for what benefit? Are the savings worth it?”

Sometimes the fleet operator is left with no choice.

When Linda O’Hara, fleet manager at Musgrave, was experiencing problems with her fleet management provider she asked it: “Do you want our business?”

The situation didn’t improve and the choice was effectively made for her. She switched to ING, then faced a double-whammy as that business was acquired by Alphabet in 2011.

The risk of switching is that there is no guarantee what the new provider will be like.

Jenner likens it to recruiting a new employee. They might say all the right things at the interview stage, but what will they actually be like in the job?

“Be as certain as you can be,” she says. “Visit their premises and speak to existing customers.”

This isn’t foolproof as the provider won’t put a potential customer in touch with customers who have had bad experiences. Views can also be sought at industry get-togethers, such as ACFO meetings or Fleet News roundtables.

O’Hara has found it useful to talk to fleet managers about their experiences with leasing providers at ACFO meetings.
“You get to hear who has had problems with what provider and generally steer clear of them,” she says.

But Jenner adds: “A bad experience for one, might not be the same for someone else. Some leasing companies don’t meet the requirements for some, but might for others.”

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