Fleet News

Firms urged to seek open book on supply

FLEETS should demand an ‘open book’ approach from their suppliers as standard to prove they are getting value for money from contract hire and leasing firms.

Under open book arrange-ments, leasing companies let their customers see the exact costs of running and supplying vehicles to fleets, so that any unexpected savings can be shared.

By demanding open arrangements and also considering other funding options apart from contract hire, companies could slash their vehicle costs by one-fifth, according to Total Motion Vehicle Management.

The firm claims that fleets are ‘over-reliant’ on contract hire and could actually save more money by considering different funding options.

Simon Hill, managing director of Total Motion, said: ‘Other than keeping fleet management in-house, or using contract hire there are few alternatives, which undoubtedly explains the growth in contract hire, but for the vast majority of customers the perceived control it offers comes with a hefty price tag. The deal is often inflexible, with penalties for going over contracted mileage, ending the contract early or if the vehicle is returned in a condition that the supplier doesn’t like. Contract hire is only part of the fleet equation.’

Total Motion has completed several trials during the past two years looking at alternative methods of funding, which has shown that more flexible methods can be more cost- effective. To back up its claim, the firm has launched Prism, a hybrid funding option, backed by management services covering the fleet life of the vehicle. Hill said he was determined the service would banish ‘weasel words’ such as ‘excess mileage charges’, ‘end of contract charges’, ‘refurbishment charges’ and ‘early termination penalties’.

He claims every penny spent on vehicles and every penny profit made is available for audit.

Additional costs incurred by the customer are charged at net cost without penalties or mark ups, he claims.

He said 80% of any surplus profit from each vehicle agreement is returned to the customer. TMVM was established in Leicester in 1998 by Hill, originally operating as fleet a consultant to corporate fleets of more than 1,000 vehicles.

It now manages vehicles nationally and in Europe for companies with 10 or more vehicles.

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