Fleet News

Motorbikes: an untapped leasing market

'THE fleet industry has done little to exploit the potential of the motorbike. Part of the reason is that bikes remain something of an unknown quantity in a sector dominated by cars and vans.

There have been times though when it seemed the big players would commit more substantial resources into tapping the bike market. A few years ago there was much publicity surrounding the growth of the motorcycle market with the coining of phrases like 'born again biker' and it seemed an ideal opportunity to tie bikes in with cars on user-chooser contract hire deals.

Higher end staff, those very types who were re-living their youth, but at a faster speed, must have looked a hot prospect for writing extra business and for a time it looked like fleets would grasp the chance.

The take-up of this opportunity, however, has in the end always been more limited than many observers expected. The problem is that the big contract hire players feel uncertain about the magnitude of the benefits they might enjoy. Clearly, if you wish to grow part of a business, significant resources must be invested in doing that. If the confidence in a substantially beneficial out-turn is not there, then those resources are not committed.

So the industry is held back by the need of evidence for a real business case, while that evidence is only lacking due to the dearth of resources committed to that area – a typical 'chicken and egg' situation.

This means that, for the potential end user, the route to having a company bike is much less straightforward than for choosing a car. I even had experience of this myself when attempting to combine car and bike as my choice of company transport a few years ago.

The onus was very much on me to find information, rather than finding myself inundated with choices and options. The time when it last seemed there would be a determined move into bike business was at the end of the parallel imports explosion, which had done so much damage to residual values.

It looked as if the residual value instability this caused might be over, enticing contract hire operators into a new and potentially lucrative field. But instead of heralding a new era of stability this was followed by a period of over-supply and endemic discounting which ensured that stability would still be some years away.

However, we are there now, but on the face of it the possibilities have so long been overlooked that bikes remain largely off the company fleet agenda. For anyone exploring the company bike market there are a few common sense factors which require a careful approach.

For example, the tolerance for mileage is much flimsier in the motorcycle sector with a trade favouring very low figures. The car trade expects ex-fleet vehicles to have 60,000 miles on the clock after three years but the average annual mileage for a bike is just 4,000.

One of my dealer contacts applies a blanket cut-off at 10,000 miles, while another stretches to 15,000. Viewed from the bike market perspective, the ideal mileage on a three-year-old bike is 10,000 or below. This means that contract hire terms must be very carefully drawn up and strictly enforced if the bike is not to find itself unwanted at the end of the period and all the profit wiped out.

Running costs are also very different for bikes. While it is not unusual for a £200 set of tyres to last 20,000 or 30,000 miles and more on a car, a single bike tyre costing typically £200 – four times as much – can be rubbed out in 2,000 miles.

Everything is down to individual driving or riding style but expensive replacements are undoubtedly more frequent on two wheels. Service intervals too are more frequent for bikes.

But, cautionary notes aside, the fact remains that there undoubtedly is demand out there for bikes in the company vehicle market.

BMW and Harley Davidson already enjoy substantial business from personal contract hire and the power of brands like those would translate comfortably into the fleet world. Residual values, a natural pre-requisite of profitable fleet business, are far more stable than for several years so there is really very little reason for many operators not to break with tradition and embrace two wheels as a potentially valuable source of additional profit.

However, this is highly unlikely to happen without a clear and obvious demand from the end user. The final answer to the problem, therefore, is for those who would welcome such additional choice to make their voices heard in the right places.'

  • Rob Hobson is editor of CAP Green Book, the motorcycle equivalent of CAP Monitor
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