Fleet News

Businesses warned of contract hire complacency

Companies who remain with the same contract hire providers without monitoring market prices could be wasting huge sums of money, completely unnecessarily.

Jayne Pett, operations director of Interactive Fleet Management warns that in the current market, price fluctuations can be quite severe between suppliers and new business is often won with loss leading prices that are unsustainable and will inevitably increase.

“When companies review the market for a contract hire provider they often use a basket of vehicles based upon a fixed term and mileage, such as three years and 60,000 miles. They then benchmark prices across a number of companies,” explained Pett.

“This is a sensible approach because at that moment in time you can draw fair pricing comparisons based upon standard terms with vehicles relevant to your own fleet. You can also tie this into your budgets based upon your vehicle grading and the numbers of drivers per grade.

“However, once that initial review is completed, and a contract hire supplier appointed, it is rare for those precise vehicles on those actual periods and mileages to be ordered. After all, drivers cover different mileages, manufacturers bring out new or upgraded vehicles and the whole basis for that original price comparison moves quite quickly.

“At this point, price increases can go undetected unless you continue to benchmark based upon the vehicles you are actually ordering. However many fleet operators don’t continue to benchmark regularly enough because of the level of administration and overall hassle-factor.”

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