Fleet News

Leasing industry should spread risk to avoid disaster

##CAPsml--left####Martin Ward--right##AS uncertain times continue, the trade really doesn't know what to buy for stock, or how much.

This is the time that the leasing industry should look at its vulnerability and make changes to combat any further potential disasters in the future. The spread of risk is now becoming the most important factor, when it comes to both the split of cars on the fleet and the length of contract.

This means having a wider spread of cars, in different specifications and colours, and putting on the fleet vehicles from a variety of manufacturers that up until now have not been considered.

Taking a bit of a calculated gamble on some of the more unusual types of vehicles when setting monthly payments can and will help to give the trade a better choice in the future and help protect residuals.

Getting the end-user to accept these cars may be a bit more difficult, but if they are offered and they fall within the allowed monthly payment, then anything will be considered.

The mainstream fleet manufacturers are already offering a variety of obscure models and limited editions, with a wide choice of engines. It is these that should be targeted in addition to the more 'regulation' models.

Alternative manufacturers who are desperately trying to gain ground in the fleet market must now take heart that events beyond their control will have some benefits to them.

Spread the risk and move away from the norm for sales success

FLEETS and leasing companies can effectively have a more desirable car to dispose of by having a larger number of vehicles on shorter replacement cycles.

The last time I mentioned this I got shot down in flames by some of you in the industry, as the three-year/60,000-mile contract is now the norm.

But having spoken to many in the leasing industry, it seems that the few who are actively going out and selling shorter contracts, and have been for some years, are seeing a better return on their money.

Admittedly the monthly payment is greater on a 24- or 30-month contract and many salespeople are accustomed to trying to beat the magical three-year monthly payment offered by the competition, rather than selling the benefits of shorter terms.

Yes, it costs more every month, but you only have the car for two years which is a big advantage to the company, the driver, and ultimately the leasing company.

The trade is desperate for two-year-old cars and there aren't many about. If there were, good money would be paid. The simple moral of this story is to spread risk. It is never easy to make changes, to require salesmen to ask for more money per month and to actually sell the same vehicle over a shorter term, when direct comparisons cannot be made with the competition.

But lifestyles are changing and both the public and the trade are demanding more variety, a shift away from the norm. Those that do make changes are the most likely to succeed in the future.

No intentional self-registering but there may be cars in hiding

EVERY envelope I opened last week was from a manufacturer expressing delight at the magnificent new car sales figures for September.

Depending on which press release you read, the market seemed to be up by about 25 per cent, with over 443,000 cars being registered. We knew that September would be a big one, but this is up on everyone's expectations.

If the majority of these have been sold to fleets, and most of those are on three-year contracts, then the auction houses had better be prepared for a huge influx of cars in September 2004.

On the other hand there may be a few three-month-old, unused cars around on the first of December this year, but more likely they will come out of hiding when the market picks up in January. I am not suggesting there has been any self-registering, but a few more tactical cars have been registered than usual.

One dealer I visited last week had just found a 2000 X-registered Nissan 200SX in the compound, with 42 miles on the clock. This is just one example of many from a variety of franchised dealers around the country that have been taxed and forgotten about, only to appear a year later during a stock check.

This causes much embarrassment to the dealer staff, creates huge financial problems, and leaves the accountant with a lot of explaining to do.

  • FNN allows you to search for REAL prices reached by REAL vehicles sold at the country's leading car auctions. To start your search click here.

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