WHAT trends are happening in the world of larger fleets? And what can SME businesses learn from them? Brian Rogerson looks at Peter Cooke’s analysis of the most recent FleetEye report on corporate fleet activity.THE following is a report on Peter Cooke’s recent analysis, writes Brian Rogerson, and while it tends to reflect the ambitions of larger corporate, there is plenty here that is of interest for smaller-sized SME businesses.
The recent Fleeteye Quarterly Survey of UK fleet operators indicated overall a net growth in fleet size. A positive message: respondents are anticipating a growth in demand for company cars (35%) which is more than twice the number of organisations expecting a decline in demand (15%). The same ratios apply to LCV demand, by the way.
Perhaps more important than the anticipated change in demand is the data relating to “fleet size changes in past six months” where a net growth in fleet size has been recorded.
Interestingly, the expected changes outrun the historic growth figures by a significant factor; the critical issue is, however, just how many units will be involved in future fleet growth? The pattern, at least as shown in responses, is currently stronger than it has been since mid-2009 for both cars and LCVs.
What about car choice?
Some 60% of fleets limit choice of car manufacturer with 11% limiting choice to a single manufacturer and less than 30% offering free choice.
Looking back at historic trends, this suggests fleet operators are offering less choice than in the past. Given the personal tax implications there may be some complex human resource issues raised at times.
When it comes to choosing a car, the two most important criteria are CO2 emission limits and fitness for purpose. Both of these criteria have jumped significantly since the previous quarterly survey.
In the case of CO2 emissions the jump has been by nearly 30% – while the “fitness for purpose” criterion has escalated by three percentage points less. These changes might be an indicator that fleets are replacing older units and being much stricter in vehicle provision and becoming increasingly aware of the penalties for high CO2 emissions and less suitable vehicles.
Financing business cars
Contract hire funding is used by some 69% of organisations. The nearest challenger is “ad hoc hiring”, with some 37% of fleets using it.
“Paying a mileage allowance” is the third most popular closely followed by “Cash for cars”.
Outright purchase is much lower on the list demonstrating how popular contract hire has become: in 2009 40% of survey respondents used this method of business car funding; in the current report it’s now 69%.
On the other hand, “paying mileage allowances” and “cash for cars” have both dropped by 10% or more since their peaks over the last few quarters.
The reasons? Changing business confidence, the range of contract hire products on offer, the need to release capital and the need to predict costs accurately as well as a stricter use of vehicles and visits, whether to clients or suppliers.
Over the past couple of years, the whole approach to vehicle financing has come under scrutiny and the Fleeteye survey is picking up the changes.
Professor Peter N C Cooke is KMPG Professor of Automotive Management at University of Buckingham.
The original article was first published in www.assetfinanceinternational.com. You can read the original report here: Fleeteye Quarterly Survey of UK fleet operators
Also read this
Our Special Report: Are company cars becoming more popular with businesses.
