Fleet News

Companies assess fleet needs as banks hold out

Companies and lenders alike have looked at fleet and considered whether it is core to their business, according to leading suppliers.

An invitation roundtable attended by five Fleet News reader recommended suppliers discussed how banks were looking to pull back from lending to fleets, while companies themselves were assessing their fleet options.

Some were outsourcing, others were reducing fleet sizes. A few have decided to replace company cars with cash.

“With the pressures on banks, they are looking at contract hire as being marginal – they can make more money from other products,” says Inchcape Fleet Solutions finance director Gary Woodcock.

“A lot of companies are under procurement freezes. They have to be more flexible with their packages. Redundancies and unemployment creates spare vehicles that they have to utilise and this requires greater discipline.”

Jason Francis, managing director of  software supplier Jaama, believes the drivers for changed have altered. A few years ago fleets were growing because companies were growing.

“Now it’s about managing cost and the supplier base and fleets are reducing in size,” Francis says.

Quartix director Andy Kirk adds: “People are less willing to commit to long-term contracts because they are less sure about future changes.”

The spotlight has been lit on fleets as transport costs have risen through pump price rises. While employment costs can be tackled through pay freezes and redundancies, company cars and vans – the second biggest business overhead – present a bigger challenge.

Cost is the overriding driver of fleet policy and few suppliers see this changing.

Environmental concerns have been sidelined by many companies save those who need to present a green image and public sector bodies which have been set tough Government targets on emissions levels. Even health and safety has slid down the agenda.

“Companies have never had tools to focus on costs – now they do with fleet software and telematics,” says Kirk. 

Francis adds: “Software has given them access to the things that they didn’t know – now they have to prioritise what they focus on because there is so much information available.”

All the suppliers agreed that fleet managers were of key importance, particularly in larger fleets.

Decisions are increasingly taken in the boardroom, but it is always the fleet manager that has done the groundwork and made the recommendations.

However, they felt that the demarcation line had changed in terms of the number of vehicles needed to justify a fleet manager.

“It used to be the low hundreds; now it’s more like 400-500,” says Francis.

“Information is readily available in digestible chunks so it makes it easier for other departments like HR and finance to have a role in managing the fleet.”

Public sector fleets, with their more specialised heavy vehicles, tend to have fleet managers running smaller numbers of vehicles as do van fleets with their operational emphasis on efficiency. Perk car heavy fleets, on the other hand, have more vehicles.

“Fleet management is a proper profession and requires highly skilled people,” says Kirk. “Fleet managers we meet are bright and astute about their fleets. They have all the numbers to hand about costing and performance.”

Nigel Davis, Auto Windscreens sales and marketing director, adds: “Enlightened companies understand that they need well trained fleet managers for health and safety as well as cost control.”
Francis poured cold water on suggestions that the fleet manager is a dying breed.

“People have been saying that for 10-15 years. There are fewer and their role has changed with some responsibility diversified to finance and HR, but they are still out there and they will continue to exist.”

He points out that companies are increasingly de-centralising costs by charging then out to individual departments at local level: “This motivates them to do something about it.”

Expectations of the level of services provided by contract hire and leasing companies is growing, according to Woodcock. “The range of services that we are asked to provide has increased, fine admin has multiplied, for example.

And there is an expectation that we will do it all for the monthly rental – that’s a challenge.”

However, a number of larger fleets have restructured to move into contract hire and leasing, according to Francis. This enables them to take advantage of tax breaks on VAT.

“These fleet managers have a different role to a traditional fleet manager,” he says.

Driver communication with fleets is changing as mileage, heath and safety and maintenance moves from paper-based to electronic. Fleet managers also need to be more aware of driver management, rather than vehicle management.

“Fleets have to manage driver behaviour – they have to understand where the money is being spent by the individual,” says Paul Nicholls, channel manager UK retail fleet business at Shell UK. “It’s driving down responsibility to individual drivers and that requires education.”

Woodcock adds: “In the past you could get away with approximate accounting on mileage figures – that is no longer good enough. It has to be real time or daily capture and this is a challenge for drivers.”

League tables highlighting the worst offenders are becoming more popular as drivers come under greater scrutiny. Integration of systems is making to provision of this level of data quicker and easier to analyse.

“People used to want just the data. Now they want the data analysed and provided in a report,” says Kirk. “And some even want solutions to the issues.”

And he adds a warning to companies dithering about whether to invest in software or telematics: “Companies that don’t adopt the technology will be increasingly marginalised because it makes them more competitive in terms of efficiencies and cost savings.”


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