The contract hire industry has enjoyed the best of times and the worst of times over the past few years. Business has been booming as employers have shifted away from outright purchase to contract hire as a way of guaranteeing the running costs of their fleets, particularly in terms of residual values.
More than half the vehicles now joining fleets are funded by contract hire, which can guarantee a vehicle's monthly cost by estimating both its maintenance expenditure and its future residual value.
But as demand has soared, so has the risk for leasing firms whose profits depend on accurately predicting used car values. Many firms have suffered the worst of times in massive losses as residual values fell far below their forecasts over the past two years.
In such an environment, a company may find it difficult to respond to the challenge of creating new and innovative services to meet customers' changing needs.
But double Fleet News Award-winning contract hire firm Interleasing has done just that, creating state-of-the-art services that help fleets cope with some of the biggest changes they have faced in the history of company cars, especially the new carbon dioxide-based company car tax, which has forced companies to review car provision.
Within this challenging environment, Interleasing has stood out for its wide and comprehensive range of services, web-based products and heavy staff development and training ethos, which secured it the Toyota Fleet-sponsored best contract hire company award.
Part of its product development includes the Alto scheme, a car ownership plan that provides the equivalent of a company car, but without the benefit-in-kind tax burden, in response to the recent changes in company car tax.
Its expertise and the flexibility included in the scheme ensured that Interleasing took the Nissan-sponsored best company car tax initiative award in a second win at this year's Fleet News awards. Nick Brownrigg, managing director of Interleasing, said a vital part of the firm's success was the award-winning team supporting the firm.
He added: 'Also, the quality of the management is critical to creating an exciting atmosphere to work in. We have searched for talent that we can build on and develop.'
Retaining quality staff has been vital in the past year as Interleasing has expanded to take on the contract hire obligations of both Saab Contract Hire and Vauxhall MasterHire, consolidating its position as the fourth largest contract hire firm in the UK, according to the 2001 Fleet News FN50.
The investment has paid off, with the Fleet News Awards judges pin-pointing a 'step-change improvement' in customer service.
For Interleasing, this begins from the moment potential customers pick up the phone, with standard service levels demanding a response within three rings, while return phone calls must be made within a working day.
A range of internal initiatives have been introduced in the past year to improve efficiency, ranging from new service level agreements to the launch of a performance improvement team and a new internal telecommunication system.
Interleasing also uses four separate surveys to examine its customer service levels and ensure it identifies any potential problems and reacts to them, all of which led to a 99% customer retention record last year.
Improved service underpins new initiatives launched in the past year, such as ProAct, the firm's accident management service, a driver information card, driver phone line and the Alto structured personal leasing scheme.
The Fleet News Awards judges said of the Alto scheme: 'Such schemes are not new, but historically the technical preparations, tax planning and human resource implications meant they were not for the faint-hearted. Interleasing's Alto scheme overcomes many of these difficulties by offering a completely outsourced solution.'
The idea behind such schemes is quite simple - to provide the look and feel of a company car to the driver, while avoiding company car tax because the employee, not the company, owns the car.
This enables employees to choose the car they want, rather than a car they are forced to buy through emissions based taxation.
Interleasing claims Alto could save employers up to £1,000 per vehicle per year and has already moved its own drivers on to the scheme.
Brownrigg said: 'British firms have four choices under the new taxation system for drivers who are faced with much higher company car tax bills: do nothing and accept that staff will be demotivated when faced with a new tax hike; pay them greater salaries to accommodate their increased costs; force drivers to accept smaller-engined cars or change the way the fleet is funded.'
Brownrigg expects the Alto fleet to reach 10,000 vehicles by the end of this year, with 11 clients already signed up and two more to follow.
But the scheme should not simply be seen as a blanket solution to all of a fleet's problems, Brownrigg adds.
Instead the benefits for each company and each driver need to be examined on their own.
'The scheme is viable for any potential fleet operator, but there is a cost of advice that is provided that has to be taken into account when looking at potential savings,' he said.
'It is not a panacea for every fleet and you must be able to identify specific circumstances where savings will appear.'
But developing a product is pointless unless you are able to deliver it effectively to customers.
Therefore, Interleasing has enlisted highly trained staff educated to MBA level to promote and help implement Alto schemes.
Brownrigg added: 'If we are going to lead the market, then we must have high quality staff, including staff in our call centre, who are highly trained. We have focused on improving loyalty among customers, so Interleasing is also a player of strength, as well as size.'
If size matters, then Interleasing certainly has figures to impress, with a managed fleet expected to reach 30,000 vehicles by the year-end, along with 85,000 funded units, incorporating Saab Vehicle Finance and Vauxhall MasterHire, 20,000 accident management units and 10,000 Alto units.
Work on integrating the operations of Vauxhall MasterHire and Saab Contract Hire has brought new opportunities for growth, according to Brownrigg.
He said: 'Different parts of the business have separate sales forces, because their target markets are different. Saab tends to be aimed at the professional, while Vauxhall MasterHire tends to be aimed more at small to medium businesses.'
Vauxhall MasterHire and Saab Contract Hire benefit from dealerships throughout the country operating as their 'shop windows', with a clear chain of command identifying when business is passed on to Interleasing.
Brownrigg said: 'They work with manufacturer sales teams and with their own dealer networks in the small to medium sector. There is also a corporate sales team that works more directly with the client but liaises with the dealership.
'For the biggest solus deals, then it has to be considered if they are suitable for private label as opposed to Interleasing. If the customer wants the widest possible range of services, then it would be passed to Interleasing to negotiate.'
Use of the internet is also becoming a major new sales channel, allowing for orders to be taken with the minimum amount of rekeying.
Interleasing is also using the website to deliver additional services to customers, such as creating intranet sites for employers, so drivers can look at their car options.
Brownrigg predicts that as the internet allows drivers to order their own vehicles, 90% of orders will be created electronically. He added:'The sophistication of current fleet management services will grow immensely in the next five to 10 years. Our 'stake in the ground' is you will not get better advice from a leasing company than Interleasing.'
Nick Brownrigg life and times