Fleet News

Fleet funding: funding forecast for 2006

FUNDING is one area of the fleet industry that is unlikely to escape change in 2006 as industry experts predict a year of consolidation, an increase in mixed funding methods and flexibility from providers.

With fiercer competition in the sector, fleets will have to sift through a multitude of new funding options and choices.

Some of the industry’s key funding experts have given their views on what 2006 will hold for fleets.

Keith Allen, managing director, ALD Automotive
‘Consolidation and corporate activity is likely to continue in 2006 but such activity undoubtedly results in uncertainty and will breed concern among companies as they wonder whether suppliers will still be committed to providing a fleet service in the future.

‘This confusion with respect to commitment to investment and longer-term stability provides a golden opportunity for established players who are committed to the sector.’

Richard Schooling, commercial director, Alphabet
‘There will be a trend to offer a mix of funding schemes. As well as their strong driver appeal, the broad financial base of such schemes makes them largely independent of Approved Mileage Allowance Payment (AMAP) rates while allowing employers to derive the maximum savings by paying cash as part of overall structure solutions.’

Paul Turner, operations director, APD Automotive (authors of the Landmark survey)
‘Fleet managers will demand increased flexibility as well as capability from their suppliers, with tailored packages and a wider portfolio of products, as well as a strong suite of internet-based sales and aftersales facilities.

‘From the perspective of UK leasing companies, 2006 will be a year when size will matter. In the research we carry out, fleet managers have moved sharply in the direction of solus supply and this trend looks likely to continue.’

Steve Underwood, business development director, Hitachi Capital Vehicle Solutions
‘From a leasing company position, there will be a greater demand from fleet managers for leasing companies to provide vehicle-related solutions to their own business needs – eg policy advice for cars and vehicles and specification advice for commercials.

This will result in contract hire suppliers being selected on overall value of the solution to the customer’s business rather than just who has the cheapest rate.’

Terry Bartlett, managing director, Inchcape Fleet Solutions

‘Consolidation in the vehicle leasing industry may well continue. We will continue to streamline and enhance service delivery with the provision of online tools, but we are committed to ensuring that ‘real people’ will deliver real customer service to customers. Too many leasing providers use consolidation and web-based developments as an excuse to remove staff from direct relationships with clients. That is not our policy.’

Roddy Graham, commercial director, Leasedrive Group
‘Looking forward to 2006, we predict that another high-profile bank-owned leasing and fleet management company will follow HSBC’s lead with a similar arrangement and the fleet management and leasing sector will see further change and consolidation. The smaller, niche service operators will continue to catch the eye of customers who believe that a ‘small and nimble’ partner is more appealing than the ‘big and butch’ provider’.’

Kevin McNally, regional senior vice president, LeasePlan
‘There will be a major shift in how organisations think about the environmental impact of their fleets, not just by considering alternative fuels but looking holistically at the fleet to reduce mileage, fuel and emissions. It has been talked about for some time, but only now are the processes available to make it happen.’

Jon Walden, managing director, Lex Vehicle Leasing
‘The last two years have seen a major shake-up in the industry. Customers are focusing on a range of issues – among them, the move from car to cash seems be accelerating. This is a feature of the rapid individualisation of society which looks set to continue.’

Nigel Stead, managing director, Lloyds TSB autolease
‘The leasing industry has faced some challenges during 2005 and the greatest would be the increasing level of regulation we have had to deal with. The biggest challenge for our business over the next year is to resist the commoditisation of our products especially in the corporate sector.’

Gary Hobson, managing director, Masterlease
‘We are predicting a rise in demand for mixed funding methods as we start to see the end of the one-size-fits-all company car scheme. There are also further market changes to come next year. Vehicle leasing may become less attractive to banks because of the capital they will have to put into the business relative to outer lending. With many leasing companies owned by financial institutions, we could see some significant changes in ownership over the next few years.’

Andrew Cope, chief executive, Zenith Vehicle Contracts
‘The company car will fight back against cash as fleets make their cash policies more comparable to their company car polices – eg CO2 restrictions for cash allowance holders and more controls around the type of car chosen, taking into account all those other duty-of-care issues such as maintenance and insurance. This process will start to encourage more businesses to favourably consider the company vehicle.’

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