Fleet News

Demand for company vehicles still expected to grow

Simon Turner campaign director DfBB

By Simon Turner (pictured), campaign manager, Driving for Better Business

2020 has forced many firms to radically alter their business models simply to stay operating.

The uncertainty around the economy, and the prospect of further lockdowns, whether at a national or regional level, means businesses have had to adapt quickly within what is often a continuously changing set of parameters.

In September, after six months of restrictions, Driving for Better Business (DfBB) carried out a survey.

It contacted 150 owners of small-to-medium enterprises (SMEs) with a turnover of less than £10 million who hire people to drive for work to see how coronavirus had affected them and what plans they were making to strengthen their businesses and ensure their survival.

At the same time, DfBB polled 152 board-level decision-makers in larger firms.

While a significant number were obviously very troubled by the situation, we were heartened to note that many businesses were still optimistic about the future with 41% of large firms and 21% of SMEs still expecting to grow.

Fleet operating costs a key concern

Unsurprisingly, the main concern for SMEs was about rebuilding their businesses with 46% concerned about controlling operational costs. 

Running company vehicles is one of the biggest costs in any business.

If your business is involved in home delivery, you may well have expanded to cope with additional demand.

If not, you may have started a delivery service to mitigate the fact that customers aren’t coming to you

Servicing, maintenance, tyres, fuel, damage repairs and vehicle insurance are often seen as cost of doing business.

All are directly related to how a business manages the people who drive their vehicles. 

Poor management means excessive costs aren’t identified and the driver behaviour that leads to the higher costs isn’t dealt with.

Better management can reduce those costs significantly and, therefore, add to the financial strength of the business to help it cope better with uncertainty.

Controlling these operating costs on vehicles could make a vital contribution to the financial strength of your business and help protect it as the economy struggles to recover.

Not controlling these costs could have a significant impact on your ability to weather the storm.

Vehicle demand is changing

The answers to survey questions relating to future vehicle use presented a picture of very mixed expectations.

Most SMEs were looking at maintaining the status quo in terms of their fleet requirements while most larger firms were expecting changes in demand.

A huge increase in working from home and video meetings, alongside a much reduced desire to attend exhibitions and conferences, might indicate less overall demand for company cars, yet companies of all sizes were expecting to need more company cars than fewer.

A surprising 56% of larger firms expect to need more company cars.

The picture for vans was much the same with almost 50% of large firms and 17% of SMEs expecting to increase their van fleets, both figures being higher than the number of companies expecting a decrease.

The firms surveyed were also expecting to make much more use of external delivery firms, further driving demand for commercial vehicles.

All of this provides the contract hire and leasing industry with some strong opportunities to support businesses through the continued uncertainty.

Cost control for customers should be a main consideration, so flexible arrangements that allow right-sizing to maximise fleet utilisation should be a priority.

There are also big increases expected in grey fleet with 70% of large firms and 31% of SMEs expecting an increase in staff using their own cars.

Short and mid-term agreements could be useful to help customers mitigate what would otherwise be a big increase in business risk.

 

 


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Analysis and insight into the UK's contract hire and leasing industry

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