Fleet News

Fleet Focus: State of the industry

IN the first of a quarterly series of special features looking at the state of the industry, Phill Tromans talks to fleet managers and suppliers about the key issues they are facing.

  • PAUL KERRIGAN
    Head of customer care and supplier development, Lex

    ‘WE have quite a few instances in London of franchised dealers not providing us with a good maintenance service. There is a delay of three weeks before you can book a car in and £130 per hour labour rate.

    Don’t be afraid to use an independent for servicing as we have done in London across certain franchises. Their labour rates will be lower and their quality of work is normally very good. As long as you ensure the independent uses original parts and any warranty work still goes through the franchised dealer, you shouldn’t have any problems.’

  • MIKE WATERS
    Head of markets analysis, Arval

    RECENT months have seen some respite in fuel prices but the last few years will have left some fleets feeling like hostages to fortune as fluctuating pump prices leave it almost impossible to forecast fuel expenditure.

    New legislation could have implications for fleets. If companies are not mindful of their responsibilities to their own employees and other road users, the consequences could be dire.

    GRAHAM TWIST
    Fleet manager, administration fleet, Salvation Army

    PROBABLY 50% of our drivers are from overseas. They come into the country with their overseas licences and we give them a car. After a year they have to take a UK test, but if they don’t take the test it becomes an issue. So chasing people for their documents and chasing people for licences is quite time consuming at the moment.

    The DVLA says it’s a grey area – it’s up to the driver to prove his or her status if challenged. My worry is if there’s a serious accident, it comes to court and they haven’t got a UK licence then we could have a problem.

  • JON WALDEN
    Managing director, Lex

    THERE are lots of niggly issues all fleets have to deal with, but still the most frustrating is the wasted time, energy and money in the extra administration caused by the likes of the congestion charge and forthcoming smoking restrictions in vehicles.

    Just as we’ve seen our congestion charge fines fall by 36%, the zone has widened and with more cities looking at charging drivers, the administration will only increase in the coming years.

  • GEORGE REID
    Head of technical services, Lloyds TSB autolease

    IN the last few years, we have noticed that complicated manufacturer service schedules have become more widespread across the industry, which has meant an increase in the number of dealers applying incorrect service schedules to the latest vehicle models.

    This has resulted in dramatic overcharging to the fleet industry, due to key areas like incorrect labour overtimes, part costs and oil quantities and costs being applied. Some other maintenance repairs also fall into the category, such as brakes and cambelt replacement.

    We are speaking with manufacturers and dealers to explore possible solutions and improve overall operational procedures.

  • JEAN SMITH
    Production and fleet administrator, Oxoid

    WE have a system of checking people’s licences, which is quite a bone of contention at the moment. Trying to get all the information back is often quite difficult. It seems to take so long to get the information in and get copies of their licences.

    We also have problems with drivers not informing me of accidents. Sometimes I don’t know about an accident until I get reports from our accident management companies. It would be nice to be told in advance.

    We’re concerned about mobile phone legislation. All our reps now have Bluetooth sets for hands-free communication, but we’re mulling over the possibility of changing our policy to eliminate using the phone in the car at all.

    I’m also worried about control over servicing for cash-for-car drivers.

  • KEN BAILEY
    Fleet director, MiniClipper

    LEGISLATION keeps us very busy at the moment. For our bigger vehicles, trying to integrate the working time directive with tachograph rules is quite time consuming. That and the mobile phone legislation is all worthwhile, but it all needs administering and people need training. Road-charging taxes are quite worrying. The industry seems to be suffering to prop everything else up. Obviously nothing’s been decided yet, but it’s hanging over our heads.

  • PAUL PLUMMER
    Assistant group fleet manager, PHS group

    THE extension to the congestion charging zone is the big issue for me – it’s going to cost us £10,000 a month for the commercial vehicles, let alone the cars. Costs are just going up and up and up.

    We’re also finding lots more speeding fines, parking fines and the like coming in lately. I’ve just had one come in from 3am with a driver doing a U-turn in London with no-one else around. But a camera operator caught him, so it’s a £60 fine.

    All this is costing a lot in administration as well as the fines – there’s so many cameras around these days.

    We’re finding it takes more than two weeks before we’re informed via the hire company when hire vehicles go into the congestion zone. Then we get £500 fines before we realise what’s going on.

    Clamping is also causing headaches. In some parts of the country clampers won’t accept credit card payment over the phone. Our drivers aren’t too happy about paying out cash.

  • LEANNE SMART
    Fleet and facilities manager, NRG Group

    LICENCE checking is really hard when you have lots of people and you’re trying to get information out of them. It seems to be impossible for half our drivers and the administration that goes with it is a nightmare.

    I’m looking forward to the smoking legislation but I think it’s going to be impossible to police. The main concern is people with their own cars saying ‘it’s my car, you can’t tell me what to do with it’.

  • MICHELLE HALLAM
    Fleet manager, Fisher Scientific

    WE’VE just been taken over by another company, which takes our fleet size to approximately 500 vehicles – a huge step from the 85 that we currently run.

    Included in this are quite a few car allowance schemes and my task will be to persuade these drivers to have a contract hire vehicle as this is less risk for the company from a duty-of-care perspective.

    Fleet remarketing views

  • ANDREW WALKER
    CEO, Fleet Auction Group

    CERTAIN sectors of the fleet industry still need to get maximising residual values right.

    Contract hire and leasing areas of the fleet industry could be losing millions of pounds in its innocent search for the residuals holy grail by measuring resale results against guides at the wrong time.

    Allowing vehicle disposal results to be measured against guides at the time of sale, and not the time of de-fleeting, is affecting real-life net returns and consequently the bottom line profit and stakeholder value.

    Too many remarketing managers are hung-up on chasing percentages of guide price.

    By allowing vehicles to sit on stock, waiting for the guides to drop their values, they may achieve higher percentages at the time of sale, but in real terms are actually losing money. Good news for percentages, bad news for real net returns.

  • LEWIS ARTHUR
    Managing director, VRS

    WE have been flat out since January 8 and it bodes well for a strong year.

    I attribute the volume of calls to pent-up demand from dealers for nearly new and used vehicles.

    I also believe dealers across the UK are becoming more comfortable buying vehicles over the phone and like the convenience of being able to solve their stock needs while staying in the showroom during busy periods.

  • ROBERT HESTER
    Research editor, CAP

    DESPITE a slower than normal start to the year, there are encouraging signs that the used market is now beginning to pick up. With the expectation of an increase in the volumes of 04-plate cars about to hit the market, there is a buzz of anticipation in the air.

    However, volumes appear to have been slow to build from the beginning of the year, although there have been plenty of buyers out there who are prepared to pay strong money for the right car. We are now seeing an increase in the number of 04-plate cars entering the market, which can only be a good thing as buyers will usually pay a strong premium for the first cars in the market.

    The demand for these cars not only comes from the bigger buyers, but also from franchised dealers looking at this as a way of balancing their used stock levels. More and more dealers are finding that their part exchange volumes are not what they used to be, as more retail customers realise that they can dispose of their own part exchange through any one of the electronic routes to market.

  • ROB BARR
    Group communications director, Manheim

    THE continual issue for fleets, whatever their size, is how to quickly get vehicles off the fleet, collected, inspected, refurbished where appropriate and then sold. The quicker this happens, the faster the fleet gets their money in the bank.

    At 14 days, fleets take longer to achieve this than any other market sector. It’s not simply a matter of collecting a car from a driver – inspecting it should be part of a formal process under-taken to an industry standard.

    Some contract hire companies still miss out on charging damage costs on to customers because they have not put a formal inspection process into place. Formulating policy guidelines on refurbishment will help generate higher prices on some cars and speed up others that aren’t worth refurbishing to get sold more quickly. Ultimately all fleets aim to match the dealer sector, which gets used cars collected and sold within just four days, according to our research.

  • MARK HANKEY
    Sales director, BCA

    THE key issues for the remarketing sector over the coming months are reconditioning and holding costs. For vendors, the two factors are inextricably linked.

    Switched-on sellers are increasingly insisting their vehicles are prepared to the highest standards before sale. They know that by doing this they are creating a halo effect around their sales, attracting more buyers and selling their cars quicker and for more money.

    The past 18 months have seen increasing numbers of professional buyers only sourcing stock that is in ready-to-retail condition and we see that trend continuing. Transaction price is no barrier for the right car, but condition is. If a car is poorly presented, the professional buyer will calculate the cost and time of repair and more often than not walk away.

    Making it cheaper will still not entice these buyers. They would rather pay more for the right vehicle than less for one that requires work and will occupy space in the bodyshop.

    This has created a polarised marketplace.

    Those investing in pre-sale preparation are enjoying better prices and a quicker churn from car to cash in the bank. Sellers offering non-reconditioned vehicles are experiencing longer selling times, greater holding costs and – more often than not – a relatively lower eventual selling price.

    …and some thoughts on procurement

  • LEANNE SMART
    Fleet and facilities manager, NRG Group

    DELIVERY times seem to have improved lately. We’re caught between drivers desperate for their car and dealers, manufacturers and leasing companies, but things are happening more smoothly, cars are coming out of the factory more quickly. It’s nice that they seem to be getting their act together a bit.

  • MARTYN POINTER
    Head of corporate sales, Masterlease

    AT first glance, the consolidation in the industry looks like a great opportunity for fleet managers looking for the lowest cost as everyone competes to win their business.

    Most of the larger suppliers offer similar services so on the surface there can appear to be little difference between them.

    Unfortunately, in reality many fleet managers are finding that they are disappointed with the levels of service they receive from their supplier and find that for some reason, the relationship simply isn’t working.

    This appears to be an increasing issue and more and more fleet managers are looking for a supplier that has the right cultural fit with their own business, one with whom they can build a true partnership.

    The best advice we can give is that as part of the tendering process, fleet managers actually go out and visit suppliers, so they don’t just meet the sales team but all of the people they will work with on a day-to-day basis.

    Suppliers should be open to these visits because it is in their interest as well. Now that fleet managers are increasingly outsourcing added-value services, these relationships are even more critical. How can two businesses build a true partnership if they haven’t tested the cultural fit beforehand?

  • LINDA O’HARA
    Fleet manager, Musgrave

    WE’VE just finished a complete fleet review, so I’m buying a lot of cars at the moment.

    I’m getting quotes from dealers who don’t seem to be interested. When you phone up for a quote you expect it in a couple of hours but three days later we still have nothing. You sometimes wonder if they want our business.

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