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Fleet replacement cycles expected to increase

Date: 09 September 2014   |   Author: Daniel Puddicombe

More large UK fleets expect to keep their company vehicles for longer in order to cut costs, according to new research from top five BC50 leasing company Arval.

Arval's latest 'Corporate Vehicle Observatory' research interviewed more than 4500 fleet decision-makers. They were asked if the amount of time they intend to keep vehicles will increase or decrease in the next 12 months.

Among businesses with 100 or more employees, 22% expected replacement cycles to increase compared with 18% in 2013. The trend is mirrored in the LCV sector, with 22% expecting replacement cycles to increase compared with 20% in 2013.

Mike Waters, senior insight and consultancy manager at Arval, said: "There are arguments for and against increasing the replacement cycle of a vehicle. Throughout the economic downturn it was common to keep vehicles for longer, and these results demonstrate that this is still a relevant strategy for many businesses in 2014."

Despite the expectation that replacement cycles will extend, 17% of UK SMEs are still expecting their fleet size to grow, compared with 9% last year. Larger UK companies are less optimistic this year, with 15% of businesses expecting fleet growth this year, compared with 18% in 2013.

Waters said: "For a number of years [our research] has shown that fleet growth is directly linked to economic performance and confidence. It is obvious that growing businesses often need more vehicles, with company cars and vans remaining a crucial part of the company operation."

When asked which factors influence how long UK fleets keep their vehicles, total cost of ownership came top, with 46% indicating it is their main priority compared with 40% in 2013.

However, the environmental impact of the vehicles fleets choose is growing, with 16% of businesses citing it as the second most-important factor, up from 13% in 2013. Fleets appear to be on top of tax implications for their fleets, with not one fleet indicating tax treatment as an influencer on their purchase, compared with 5% in 2013.

Waters said: "It's a prerequisite that company vehicles are fit for purpose, but. different businesses will have different requirements. This shows that for a good number of larger businesses the environment remains a key focus and one that they prioritise over all others.

"Selecting environmentally friendly vehicles often has a positive impact on running costs and can also support company reputation. We have seen cases where the environmental credentials of a fleet have helped that company to win new business."



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