Fleet News

'Stock market' route to slash supply costs

A FAST-MOVING 'vehicle stock market' is developing in which fleets can trade with a number of different suppliers each day to slash purchase costs by almost a fifth, a leading leasing company has claimed.

Pendragon Contracts believes the days of agreeing a set purchase price with a supplier for a year are over. Instead purchasing will operate in a similar way to the stock market, with buyers 'day trading' in vehicles.

Pendragon Contracts sales director Paul Ashton said: 'Everybody used to get much the same rate and the market was orderly. Today, the whole situation has changed. Leasing companies can import vehicles or buy them from brokers and will soon be able to go to other sources following the block exemption changes. These outlets can often beat the manufacturer on price.'

Manufacturing overcapacity is another factor which affects the way in which vehicles are bought, Ashton said. 'Many major manufacturers simply build too many vehicles and all build too many of at least one model. The only way to bring supply and demand into equilibrium is to push these vehicles onto the market at reduced prices,' he said.

As a result, the industry has effectively become a day trading market, with prices for the same vehicle varying by as much as 20% from different sources.

He added: 'Now, like many leasing companies, we spend much more time monitoring our competitors and the rates they charge. If their lease rate for a particular vehicle has fallen noticeably, it often indicates they are sourcing vehicles at a lower price.'

But the company has also found that despite the availability of cheaper vehicles, wholelife costs have not changed as significantly because residual values are being eroded due to a general oversupply.

Residual value experts have predicted that used car prices will fall further this year, as growing numbers of used cars are returned by fleets, swamping the market.

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