Contract hire and leasing companies live or die by accurately predicting vehicle sale prices and while a ‘marginal tailing back’ of values from current levels is being predicted if the economy improves, a raft of uncontrollable influences means a precarious balancing act is being pursued.
Traditional fleet service, maintenance and repair (SMR) costs can be forecasted down to the final penny at the benchmark three years/60,000 miles - but a raft of ‘grey areas’ fuelled by numerous factors means contract hire and leasing companies continue to build up contingency funds to meet the cost of the unforeseen.
Longer service intervals and a trend for motor manufacturers to move the requirement for ‘expensive’ parts replacement - such as cambelts - beyond 60,000 miles has contributed to a decade long changes in the breakdown of service maintenance and repair (SMR) costs.
Common business sense means that contract hire and leasing companies do not want to make a loss on service, maintenance and repair (SMR) costs so it is vital that they undertake a robust risk assessment and measure and manage the lifecycle of individual vehicle components.
In most contract hire companies someone is responsible for obtaining new vehicle data, someone else negotiates discounts with dealers and someone else obtains VRB details and negotiates tactical deals with manufacturers.
The long-awaited revised Exposure Draft (ED) on lease accounting was published by the IASB on 16 May 2013 and addresses a number of the problems identified by respondents following the initial Exposure Draft published in 2010.
Vehicle contract hire and leasing companies are enjoying a residual value windfall worth hundreds and perhaps thousands of pounds per vehicle as record used car prices makes a mockery of forecasts made in the depths of recession.
The leasing industry enjoying a residual value windfall worth hundreds and perhaps thousands of pounds per vehicle as record used car prices makes a mockery of forecasts made in the depths of recession.