Monitoring vehicle damage on fleets across Europe is a massive task – here’s how LeasePlan did it.
Have cars, have damage – it’s an inescapable fact of fleet management. A fleet manager who says his or her cars never suffer any kind of bumps or scrapes is either a god in his profession, or telling porkies.
So, accepting that the occasional prang is inevitable, fleets must then work out what constitutes fair wear and tear and where the line is that signifies damage that will harm a vehicle’s residual value.
Not accurately appraising and repairing damage can have a serious financial impact come remarketing time – an impact that grows in line with the size of the fleet. Such concerns require serious thought when managing fleets in the UK, so just imagine the intricacies and potential ramifications of ensuring accurate damage appraisal for fleets spread across Europe.
Such a challenge faced vehicle management and leasing company LeasePlan, which operates more than one million vehicles worldwide. In 2004, the firm made the decision to standardise fleet vehicle terminations in all of its European markets.
Central to this strategic move would be the company’s fair wear and rear programme, which would see common processes and standards adopted to identify damage and produce repair cost estimates for vehicles at the end of their fleet lives.
Prior to this decision, there was a whole host of different estimating processes used by local suppliers to LeasePlan in each of its markets, making consistency and transparency of standards difficult to achieve – something the firm hoped to rectify.
LeasePlan outsourced its appraisal management process to SGS, one of the world’s leading inspection, verification, testing and certification companies with 1,000 offices worldwide. SGS immediately decided to set up a partnership with a firm that could provide data on costs, parts, paint and labour across Europe and in a common format.
It chose EurotaxGlass’s, using its data alongside its EurotaxRepairEstimate (ERE) system, known as Glassmatix in the UK. Two months later, ERE and SGS’s own disposal management prog-ramme were integrated.
By the end of 2005, the system was available to SGS personnel in 13 of LeasePlan’s markets – Austria, Switzerland, Czech Republic, Germany, France, Italy, Portugal, Spain, Hungary, Poland, Slovakia, Belgium and the Netherlands.
SGS inspectors now carry out appraisals and if damage is present ERE is used to generate a repair cost estimate, which is then used as the basis for an invoice from LeasePlan to the customer.
The key to the system is flexibility, according to SGS Automotive Sector’s executive vice-president, Fred Herren. “When we looked at various estimating data providers, EurotaxGlass’s stood out for its pan-European data coverage, experience in the repair estimating marketplace and competitive pricing,” Mr Herren says, “The company was also able to provide information in a format compatible with our management systems in the USA. This was necessary for data reconciliation purposes, even though the fair wear and tear programme itself is confined to Europe.”
Delivery schedules would also prove critical. “We knew we would be looking at an incremental rollout of ERE given the geographical scope of the fair wear and tear programme,” explains Mr Herren.
“However, EurotaxGlass’s has proved equal to the task of delivering the required data to the appropriate standard very rapidly, allowing us to meet some exacting implementation deadlines.”
The ERE system is now used to support the appraisal and disposal of more than 150,000 LeasePlan vehicles each year.
“ERE has proved very flexible, allowing us to establish common data formats while adapting to the particular requirements of our personnel in different markets,” Mr Herren says.
Starting in late 2005, a second phase of the fair wear and tear programme saw EurotaxGlass’s begin the integration of its used car valuation data within the SGS disposal platform. This now allows SGS to rely on an additional source of data, providing LeasePlan with a fair market value that also takes into account the cost of correcting any damage.
“Ours is the first major fleet leasing organisation to standardise appraisals in this way, creating uniformity of processes and quality,” says Wolfgang E. Reinhold, group service senior vice-president at LeasePlan.
“This sets a new benchmark for the sector and will present a particularly compelling proposition for those pan-European organisations looking for greater transparency and commonality in how they run their fleet contracts.”