Survey reveals widespread fears over vehicle residual values
02 July 2012
An Arval-backed fleet manager questionnaire unveils overwhelming pessimism about used car values, as well as a number of other revealing trends and opinions. Paul Barker reports
The resale value of fleet vehicles is set for a slide, according to the fleet managers surveyed in the 2012 Corporate Vehicle Observatory, a report backed by leasing and fleet management firm Arval that surveyed thousands of fleet professionals across Europe, including around 300 in the UK.
It found that 59% of UK fleet managers involved with larger fleets think used car resale values will decrease, compared with 41% when asked 12 months ago. Just 13%, down from 29% a year ago, envisaged an increase in used car values.
Despite a perception that used values are set to fall, managers of the larger fleets, companies with 1000-plus employees, are split about duration of usage for company cars. According to the CVO report, 20% are looking at a decreased operation time, but 17% are heading in the opposite direction. "It is important to remember that while extending the period of the contract may look like an attractive option because it is perceived to be cheaper, it may not be in the longer term," warns Arval's senior insight and consultancy manager Mike Waters.
He said concerns with older vehicles tend to surround the condition of the vehicle as it's more likely to pick up damage, the impact on company perception created by using dated or damaged vehicles, increased vehicle downtime and maintenance costs, and the potential increase in end-of-contract charges.
On the flip-side, the majority of fleets across all size of company are increasing the period of time that they operate light commercial vehicles for. Among the group of largest companies, 27% said they were extending vehicle life on their fleet, while only 4% talked of decreases. "It's not unusual for companies to run their vans longer than their cars," said Waters. "Because they are predominantly a business tool and not part of a salary package, essentially van drivers have very little say, if any, over the vehicles they drive."
The research found 33% of UK firms with more than 100 employees use telematics, much higher than other European countries, with another 3% planning to implement a system. Key reasons given for employing the technology included reducing fuel consumption, monitoring unauthorised vehicle use and monitoring driver behaviour, although all were behind the ability to locate and track the vehicle itself.
Arval found that telematics is considered standard practice among light commercial vehicle drivers, but car drivers can react less positively.
"In the right circumstances, telematics systems can have an important role to play within the vehicle fleet," said Waters. "They allow companies to effectively keep track of vehicles, plan workload and manage driver behaviour".
But Waters did warn that technology needs to be implemented with the clear benefit goal in mind. With LCV fleets this will be towards the tracking and vehicle location benefits, while for car drivers, the benefits are liable to come from driver behaviour improvement.
Companies with more than 100 staff found the greatest outsourcing benefits lie in vehicle maintenance, by far and away the most popular response when probed about services that brought the most savings, with fuel management and tyre replacement named second and third most popular answers.
But despite the trend towards examining the benefits of outsourcing, there is also a continued, if changing, role for the traditional fleet manager, according to Arval.
"Traditionally, the model within most large companies has been to employ a specialist fleet manager to manage all aspects of the vehicle fleet while outsourcing non-vehicle travel to specialist providers," said Waters. "This may still be the case, but it may also be that the fleet manager has taken responsibility for these supply arrangements. What is clear is that the role of the traditional fleet manager is changing, becoming broader and more complex."