Fleet News

Large fleets could benefit from credit crunch

More vehicle manufacturers are expected to move into the company car sector if the credit crunch continues to bite.

And, as these newcomers to the lease and corporate hire sector enter the market with fresh ideas and a hunger for new business, they could be more open to negotiating large fleet deals with lease companies directly.

SEAT, Kia and Hyundai have confirmed that they are determined to increase their share of the fleet market.

Historically, carmakers have insisted that they have direct negotiations with large end-user fleets.

These negotiations often result in better discounts being offered to the large fleets by the carmaker than those offered to lease companies.

However, as competition in the lease sector increases as more manufacturers move in, the dynamics of the lease/manufacturer relationship could change.

Lease companies already negotiate en bloc on behalf of smaller fleets.

However, it is the large fleets – those over 500 vehicles – that they would also like to negotiate on behalf of.

The underlying issue is that lease companies consider these large fleets as their customers, while the carmakers say they are their customers.

Under European Union rules, a carmaker cannot force a lease company to tell it who its customers are.

“We recently found that three major manufacturers had put clauses in their direct supply agreements with our members, making it compulsory for them to hand over contact details for their leasing customers,” said John Lewis, director general of lease industry association the BVRLA.

“However, they were happy to rewrite their agreements after we pointed out that this infringed the current Block Exemption regulations.

“I am sure that manufacturers would like to deal directly with more company car drivers, but they recognise that leasing companies are a vital channel to this market and enjoy end-user status in the eyes of the law.”

So far no manufacturer has broken ranks and allowed negotiations to be made by a lease company on behalf of major fleets.

However, the likelihood that one of the newcomers will be willing to concede some negotiating power to the lease companies in return for access to large fleet customers seems likely.

When asked if he would be willing to consider a new relationship with lease companies, Andrew Sellars, Kia’s head of fleet and remarketing, said: “If it gives me a foot in the door, then yes, but it must be sensible and sustainable. We would have to go with it.

“We are not in the large fleet market so it would mean incremental volume growth for us.”
 

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