Click on images
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Average end-of-lease charge jumps to £290
10 August, 2009
Fleets have seen a 9% increase in end-of-lease charges in the past 18 months as defleet charges become accepted at the norm, according to auction giant Manheim.
David Mercer, managing director of Manheim’s defleet services division said: “2009 has seen a stronger focus on end-of-life charges. The average lease end charge is now £290. It was £265 in 2007.
“End of life charges are seen as part of the business now for lease companies. It’s not a profit centre but it is better cost management.
He also pointed out that a typical 20,000 vehicle fleet has the potential to see £1.4m of additional charges per year and they are likely to be budgeting to collect at least 70% of this amount. According to Mercer: “It was more like 30-35% 10 years ago.”
| ADVERTISEMENT: Content Continues Below |
|
|
The news follows recent comments from BusinessCar blogger Daimian James on defleet charges suffered with vans: “The really annoying thing is that we all know the faults won’t be fixed prior to going for auction. Commercial vehicle buyers at auction are not going to expect a six-year old vehicle to be pristine after all.
“To me that means that the leasing company gets paid twice. Once from me for the damage and then again when the vehicle is sold at auction.”
This view appears to be backed by Manheim’s data.
“In 2009 the average reconditioning spend at auction at £87 is up 10% on 2008,” said Mercer. “On average they are getting three times the value of repair back due to time it takes to sell and the price.”
Interestingly, Manheim suggested lease firms were unconcerned by the impact of end-of-contract charges on the relationship with the fleet manager as customer retention only ran at about a 33%.
For the latest news, tests and analysis sign up to the BusinessCar Daily email
Advertisement
Readers' comments
Very interesting, I did not realize this was a general trend in the industry. We run a fleet of 500 vehicles on a relatively short contract hire and although our contractual vehicle return standard have not changed for number of years we have seen a sharp increase in charges that leasing company is trying to apply over last couple of years.
Advice I can give to other Fleet Managers is to inspect your vehicles thoroughly at the end of lease and if you can try to do some of the refurbishment work in house before vehicles are inspected. It’s always the small and relatively easy to repair damage that bumps up over all refurbishment costs. Even if you do not have own bodyshop set up it’s worth finding a local supplier and making a deal with them on volume. Providing that work is done to a satisfactory standard you can make a significant savings.
We started doing own refurbishment using local supplier and then set up own bodyshop. Savings that we are making on refurbishment are significant and added bonus is that we have own set up to deal with in life repairs which further reduces costs of operating our fleet.