Signs are that increasing number of companies with larger fleets are returning to company cars rather than offering cash alternatives, but at the same time, more firms are outsourcing their fleet management.
These are the findings from a major report into the industry by independent corporate analysts Market & Business Development and back up many previous views of the future of the fleet industry, reflecting the increasing trend to outsourcing.
It said: “The fleet services market is one where outsourcing is expected to become increasingly commonplace, with the share of in-house managers continuing to decline. This can be attributed to the general trend to contract out non-core services.
“Companies are increasingly looking to operate cost-effectively by removing costs involved in the acquisition and management of company cars, as the real benefits of employing a fleet manager are usually gained only with fleets in excess of 1,000 vehicles.”
However, the report’s authors found evidence that firms were moving back to the company car, claiming: “There have been signs that an increasing number of companies with larger fleets are returning to company cars rather than offering cash alternatives to employees, a trend expected to continue, resulting in an increase in the number of fleet cars.
“The total number of fleet and business registrations is expected to decline in 2008, albeit at moderate levels, continuing the downward trend that has been evident since 2005. In 2008, the number of fleet car registrations are anticipated to decline at a marginal level, while business car registrations are expected to decline by 2%, as this sector is expected to be more affected by the interest rate rises during 2007.
“Overall, the number of fleet car registrations is forecast to increase by 3% between 2007 and 2012, while the number of business car registrations is expected to rise by 10% during the same period.”
A 3% rise would mean an extra 40,000 fleet cars in the market by 2012, while the increase in business cars reflects manufacturers increasing efforts in this profitable sector.