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Service plans: how they can save fleets money

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Manufacturer service plans are often aimed at retail customers, but should they be?

Those manufacturers that don’t have an off-the-shelf service pack for fleets argue that the differing requirements of companies make it difficult to offer one.

The popularity of contract hire with maintenance agreements is cited as another reason.

But leasing companies can, and do, take up manufacturer service plans and, in theory, should pass the savings on to their customers. This means that even fleet operators that have maintenance agreements with their leasing provider should take an interest.

Lex Autolease currently purchases service plans from two leading manufacturers but integrates the plans with its own maintenance contracts as the schemes don’t cover wear and tear components, such as brakes and clutches, and can’t be tailored to different age terms and mileages.

“The benefit to fleet managers is financial,” says Guy Mason, head of fleet services at Lex Autolease.

“The service packs we currently purchase enable us to reduce our service, maintenance and repair (SMR) budgets as the manufacturer supports the cost of the packs in return for guaranteed service retention within their network.”

Lower lease rates are one of the benefits of opting for a manufacturer’s service plan.

BMW reports that almost all leasing companies and a large proportion of outright purchase fleets which acquire its cars also buy a service plan, which start at around £300 for a five-year/60,000-mile contract.

It says these can reduce SMR bills by 50% or more: a service pack for a 320d costs £360; BMW says the equivalent work outside a service pack would cost a fleet £724.51.

“Most leasing companies adopt it on the basis that it reduces their rentals because it positively affects their SMR,” says Steve Chater, BMW general manager of product and market planning.

“The majority also service their cars at our BMW franchised dealers and this gives them a reason to continue to maintain that approach where they might have been looking at independents.

"This gives them the benefits when they come to remarket their cars.”

Chater suggests that leasing companies which purchase the Service Inclusive plan reduce their rentals by an average of £6-£10 per month.

BMW’s repatriation service, set up to tackle concerns about residual values in the face of the company’s strong growth in fleet, enables leasing companies to take advantage of BMW’s own dedicated remarketing process via its franchised dealer network.

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