Fleet executives must rethink their car choosing process if they want to bypass longer waiting periods for replacement cars caused by higher European demand for low-CO2 models.
Companies now need to start talking to suppliers up to nine months before they expect to take delivery, claims Fleet Audits director Stewart Whyte.
“Lead times have become critical. We’re faced with a chronic situation that I believe will last for another four years at least,” he said. “Everybody involved in fleet has to understand that the days of the buyer’s market have gone and that we no longer have fields full of cars waiting to be registered.
“Executives who sit between the drivers and the supply chain need to realise that there’s no point expecting instant delivery of an Audi or BMW.”
According to Whyte, lead times in excess of six months stem from mainland European countries adopting EU directives linking tax levels with exhaust emissions.
“Prior to 2005, Britain was the only market with an emissions and consumption tax regime, but the descendants of cars that used to be produced as UK specials are now the norm across Europe,” he said.
“As a result, demand is very strong for high efficiency, low CO2 models and a major contributor to the delays is the lack of investment in facilities to build more low-emission diesel engines. Another factor is that if makers can produce only limited volumes, they will put them where they make the most money and that’s not the UK.”
Whyte believes compliance with tougher Euro 6 emissions legislation in 2016 compounds the difficulties because compliance calls for further investment to meet a fresh set of engineering targets.
“Bad as it is now, the situation is likely to get worse. There’s no single solution because the delays depend on the brand, model and detailed specification, and this means fleet managers will have to negotiate intelligently with suppliers. Talking to them three months in advance is no longer sufficient,” he said.
Audi says it is making ‘every effort’ to meet the increasing global demand for its cars and claims a 10% lift in production last year helped ease the strain on the supply chain.
Though delays stretch to more than six months for some models, the company says dealers have visibility of all orders and are able to ‘cross-pollinate’ to match customer requirements to existing cars destined for stock offering similar specification.
BMW also confirmed that its new X3 is currently experiencing lead times of about nine months.
Earthquake will have ‘widespread consequences’
Fleets are set to face still longer delays for new cars in the wake of the earthquake and tsunami in Japan, believes ACFO chairman Julie Jenner.
Honda has temporarily scales back production at it’s UK plant in Swindon by 50% to cope with delays in sourcing some components.
“This disaster has the potential to have widespread consequences because virtually every OEM uses some sort of component from suppliers in the stricken region.
“I don’t want to be alarmist, but it is bound to affect vehicle production and I think people should start talking to lease companies and all suppliers about lead times.
“Looking further ahead, I’m concerned about the knock-on effect of production delays. And what’s going to happen if lease contracts run out and fleets are not able to source replacement cars?
“Leasing companies should be approaching their customers and helping with information about ordering vehicles.”
Author: Maurice Glover