Fleet News

Contract hire survey: budget lower-medium cars

RUNNING fleets is all about finding the cheapest cars, but does a low front-end price equate to the best running costs? Our panel considers the merits or otherwise of some budget cars against more established rivals.

Can low-cost cars cut it in the fleet market?

The comments of the expert panel suggest that the equation of cheap, front-end price equalling great fleet cars isn’t always the case.

Residual values, maintenance and fleet support are key factors, illustrating that the whole of the package from delivery to sales should be considered.

Skoda and SEAT have already proved they can deliver for fleets and are a useful benchmark against some of the newer brands in this survey.

Mitsubishi has a good track record in fleet with its pick-ups but can it translate into cars with the Lancer, recently introduced to the UK?

The Lacetti was a Daewoo until the start of this year, but is now a Chevrolet. Can the troubles of this part of GM be overcome to make it a fleet contender?

Kia has been producing decently built and increasingly exciting cars over the past few years, especially in SUVs, but the workmanlike Cerato will need to prove it can cut it in the fleet market.

Much can be same of the Proton Gen-2, which looks smart but could suffer from a lack of infrastructure.

In the end, these cars live in the shadow of giants like the Vauxhall Astra and Ford Focus. Can they shine?

Chevrolet Lacetti 1.8 Sport 5dr

P11D price £11,812
2005 CO2 BIK tax bill (22%/40%) £598/£1,087
2005 VED bill £145
Rental Rates
LeasePlan Fleetline £319.40
Lex Vehicle Leasing £373.00
Custom Fleet £296.11
DCSFM £269.16

Lloyds TSBautolease £315.51

Kia Cerato 1.6 LX 5dr

P11D price £10,317
2005 CO2 BIK tax bill (22%/40%) £454/£825
2005 VED bill £145
Rental Rates
LeasePlan Fleetline £296.70
Lex Vehicle Leasing £327.45
Custom Fleet £276.32
DCSFM £277.55
Lloyds TSBautolease £289.08

Mitsubishi Lancer 1.6 Elegance 5dr

P11D price £10,566
2004 CO2 BIK tax bill (22%/40%) £442/£803
2004 VED bill £125
Rental Rates
LeasePlan Fleetline £255.86
Lex Vehicle Leasing £286.35
Custom Fleet £255.67
DCSFM £256.31
Lloyds TSBautolease £268.20

Proton Gen-2 1.6 GSX 5dr

P11D price £10,412
2005 CO2 BIK tax bill (22%/40%) £458/£833
2005 VED bill £145
Rental Rates
LeasePlan Fleetline £319.64
Lex Vehicle Leasing £332.94
Custom Fleet £260.88
DCSFM £288.43
Lloyds TSBautolease £283.00

SEAT Leon 1.6 16V S 5dr

P11D price £11,067
2005 CO2 BIK tax bill (22%/40%) £487/£885
2005 VED bill £145
Rental Rates
LeasePlan Fleetline £263.32
Lex Vehicle Leasing £240.94
Custom Fleet £239.41
DCSFM £249.54
Lloyds TSBautolease £253.17

Skoda Octavia 1.6 Classic 5dr

P11D price £10,807
2005 CO2 BIK tax bill (22%/40%) £499/£908
2005 VED bill £145
Rental Rates
LeasePlan Fleetline £244.99
Lex Vehicle Leasing £272.15
Custom Fleet £229.47
DCSFM £240.38
Lloyds TSBautolease £242.84

David Harnett
Head of LeasePlan Fleetline

AT first glance, these cars seem to offer excellent value in terms of low purchase prices and size of vehicle for the money.

However, from a contract hire perspective, their residual values reflect some general uncertainties by potential UK buyers about the brand names involved. The rental figures, therefore, do not offer as significant an advantage as cars with more established fleet credentials such as the Ford Focus, Vauxhall Astra and Volkswagen Golf.

In particular, residual values predicted for the Kia, Proton and Chevrolet models seem to be most affected by a lack of familiarity to the UK public. The SEAT, Skoda and Mitsubishi are less troubled by these factors, borne out by a higher resale figure, and within this selection would seem to offer the best value.

Tracy McMahon
Pricing manager, Lloyds TSBautolease

THE Kia, Chevrolet and Proton are the least well known in the fleet industry and poor residual values mean they aren’t competitive on rental costs in comparison to the SEAT, Skoda and Mitsubishi.

The Skoda Octavia is the most competitive, thanks to its low maintenance costs. It is superb value, offering a spacious cabin and decent size boot, but the specification level isn’t as good as the SEAT Leon’s. The Leon is again competitive on rental costs and comes with a good level of specification. CO2 levels are lower than the Octavia, making the vehicle slightly better on tax. The Lacetti was the new derivative launched when Daewoo became Chevrolet. The body has been given a tailgate spoiler, mesh front grill, sports exhaust and 16-inch alloy wheels. It’s good value but high depreciation means it won’t make an appealing fleet car.

Steve Jones
Pricing manager, Lex Vehicle Leasing

THIS sector is full of budget-priced cars from carmakers that haven’t got a long fleet pedigree. However, there are two clear winners the SEAT and the Skoda. Both products are strong, particularly the stylish Leon, but it’s all about gaining respect in the fleet arena.

Both marques now have growing fleet departments ensuring companies of an infrastructure and dealers that are trained to deal with the company motorist. They also have the best residuals in this company and the lowest maintenance costs which help support lower wholelife costs and a lower monthly contract hire rental.

Mitsubishi make excellent, reliable cars, though we have only seen them as a retail brand in the past – except with the Warrior pick-up – but their product has improved dramatically so the future looks good.

As far as the rest go, to grow fleet sales they must work hard on developing a sound infrastructure, build product that is fleet friendly, keep maintenance costs down and increase residual values. Also, the unsettled nature of both Proton and Daewoo (now Chevrolet) has not helped fleet credibility.

The Octavia and Leon are sound bets, but all the others won’t trouble the scorers even on the smallest of fleet car lists for some years.

Nick Auld
Trade services manager, Custom Fleet

THIS month’s selection is quite an unusual one and not many of the models are relevant to fleets, with the Skoda and the SEAT being perhaps the most serious players in the fleet market.

The others, in the main, lack the support, back-up, dealer networks and residual value performance to make them serious fleet contenders.

The Skoda Octavia would be our first choice as the brand has come a long way in recent years and is now a credible player in the fleet arena. The SEAT Leon is the better model to drive of the two and is the more attractive from a design point of view, but it’s quite a lot smaller than the Skoda.

The Lancer doesn’t have the brand prestige in the fleet market to make it a serious contender and the marque as a whole does not provide the sort of support that most fleet operators are looking for.

Kia is an up-and-coming brand although it still has a long way to go to prove its fleet credentials while Proton too has been making greater strides in this area. The brand is still held back in the UK by a poor image.

Bottom of the pile is the Chevrolet, formerly Daewoo, Lacetti, which is the least attractive car of the bunch to look at, probably to drive and no doubt to own.

Dean Woodward
Consultancy manager, DaimlerChrysler Services Fleet Management

THESE vehicles aren’t typical for fleets, which is predominantly Focus and Astra territory.

Looking further afield may not disappoint you, but if you are contemplating putting them on fleet then you should consider some important factors.

If you outright purchase, but vehicle disposal isn’t your core competence, then beware with these vehicles. It could be advisable to enter into a lease agreement with a third party and relinquish the residual value risk and disposal responsibility.

With the majority, standard equipment is far more extensive than the mainstream offering. However, don’t be enticed by a plethora of switches and gizmos alone.

The vehicles themselves sit on a relatively even keel in terms of price.

However, quality and perception are major factors for choice. Both the Leon and Octavia have achieved these values over the past few years, but they are less apparent with the Cerato and Gen-2.

‘Chevrolet’ is the new name for Daewoo and the rebranding will certainly create a change of perception. The Lancer is a far cry from its rally car relative, the Evo, so don’t be confused between them.

Average leasing rates

THE fact that leasing firms do not often deal with the likes of Chevrolet, Proton and Kia is reflected in relatively high rental rates. Superior cars like the Leon and Octavia are cheaper than the others.

CO2 emissions

THE Lacetti’s 1.8-litre petrol engine means it has higher emissions than the 1.6-litre powered cars. The extra weight of the Octavia pushes up its CO2 output, but it is still fairly low.

Fuel economy

FOR fleets running petrol cars, they really have to hit the 40mpg mark in real-world running. Most of these cars have official figures at that mark, but can they deliver it on the road?

Residual value forecasts

PREDICTABLY, there are two clear winners when it comes to forecast residual values – the Leon and Octavia. The Gen-2 fares badly. The Cerato and Lacetti aren’t a great deal better, though.

Average net price of cars to leasing firms

THERE are not huge discounts on these cars, with £1,000-£1,500 the norm. That is due to the fact that not many volume deals will have been struck and there is not much room for manoeuvre on price.

Average maintenance costs

THE high maintenance costs for four of these cars is due to the fact that leasing firms don’t have enough data on them to accurately predict costs. That’s the danger of opting for non-core fleet cars.

How the panel voted

1. SEAT LEON

THE Leon, which is due for replacement in the next year, was voted in first place, just ahead of the Octavia, thanks to its strong all-round cost performance. Despite its age, it is still a great fleet choice.

2. SKODA OCTAVIA

JUST losing out to the Leon, the Octavia illustrates how far above the ‘budget’ brands Skoda has risen. Well-built, spacious if a little underpowered, fleets should really start considering it.

3. MITSUBISHI LANCER

THE Mitsubishi Lancer was a distant third according to the panel, but a long way ahead of the last three. It would seem that with work to assure fleets there is support in place, the Lancer could do a job in fleet.

4. KIA CERATO

COMING fourth, the Kia Cerato was voted a long way behind the Lancer. It would seem that weak residual values are a key concern, although there was recognition that Kia is up and coming.

5. CHEVROLET LACETTI

CALLING the Lacetti a Chevrolet doesn’t seem to have fooled our panel and they raise doubts about the name change. Poor residuals and very high maintenance costs make it difficult to recommend.

6. PROTON GEN-2

IN fairness, the Gen-2 is actually a good-looking car, but it was voted a resolute last by most of the panel and a monthly rental of nearly £300 makes it more expensive than some very good fleet cars.

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee