In Focus: JCT600 VLS
27 August 2021
Author: Simon Harris
Christopher Caddick, head of business development at JCT600 VLS (vehicle leasing solutions), talks to Simon Harris about the challenges faced by the company and its customers during a time of rapid change.
When discussing the recent turbulent years for the fleet car sector in the UK, JCT600 VLS's Christopher Caddick does not accept it's something it can't adapt to. "The last significant shift before recent years was the fundamental change to BIK tax announced in 2001," he says. "But even if you go back five years, we had the switch from NEDC fuel consumption to WLTP, then a prolonged period of preparing for Brexit, and what we have now is a degree of pent-up demand as a result of things being kicked down the road because of a few years of uncertainty."
Caddick has been at JCT600 VLS for the past five years, and overlapping the duration of the coronavirus pandemic so far, he has been head of business development at VLS, part of the JCT600 Group. While fleet operators have faced significant challenges during that period, he says some of them have taken the opportunity to re-evaluate their operations and bring about change.
"Businesses have been forced to look internally at cost savings and conduct reviews," he says. "Companies are really looking at their fleets and at how they might be able to make savings for their organisations and their employees.
"The problem now is if these organisations stand still, they will be left behind. In the past, it might have been possible to keep the status quo and it not have such a detrimental effect. We're speaking to some businesses whose policies have been in place for maybe ten or 12 years, and recently have been delaying reviews because of the uncertainty that everyone has experienced in the last few years."
JCT600 VLS operates a fleet of 6,238 vehicles for a variety of clients from SMEs to FTSE 100 firms, including 4,817 cars and 1,421 LCVs.
"We've invested a lot in our technology and our people to ensure we're in the best position for the future to meet our customers' needs and challenges," says Caddick.
This includes a £500k investment in a platform called Origo, which enables customers to view and easily compare all funding options available to them.
"A fleet cycle might be three or four years, so if you make a decision on a whim you have to live with the consequences for a long time," says Caddick, "And as fleet touches so many parts of a business, it takes time to educate all those involved when there's a new strategy or technology.
"I don't think fleets have consciously been slow to change, it's just that it can take a while to get everyone on board. Now, with electrification, there are cost savings as well as being able to demonstrate strong environmental credentials."
JCT600 VLS manages fleet vehicles for clients as well as holding its risk fleet of just over 6,000.
"We need to be able to deliver advice to customers whether they lease from us or not," says Caddick.
He says it was relatively easy at the beginning of the Covid-19 pandemic for the firm to shift gears and offer increased support for customers.
"As part of a large group there are some shared IT practices and policies in place, although we do have some unique to VLS.
"Getting people to work from home was easy. Our people transitioned really quickly and efficiently, thanks to robust contingency plans.
"We were quick to get the message out to customers that we were here if they needed us. They typically split into two camps: some were putting more resources into keeping the wheels in motion, while others took the opportunity to make changes.
"After that initial period, it worked for many to review their processes and push forward with new plans. We worked very closely with our suppliers during that period - ensuring customers still had access to garages or breakdown services - with Covid controls preventing face-to-face contact, and reducing the number of people able to work in service centres.
"After that it was more a focus to free up account managers' time to work with customers on developing their new plans, while for others it was time to renew vehicles and review policies based on changing fleet size. Really this was no different to before, but with the added layers of complexity with waiting for the next announcements from the government."
It seems the strategy was what customers needed and Caddick says there was 100% retention during that period.
"One customer who left us in 2018 came back to us during that period because of the support we were able to provide," he adds.
"We helped other customers who sought to defer payments. Ultimately, the customer is at the heart of everything we do and this message came from the top during this period. We're family owned and it affords us more flexibility to help our customers address their challenges.
"Customers have informally extended contracts or requested to rewrite contracts to a new mileage profile, but it's still difficult to know what the new mileage profile will be.
"We have to deal with them customer by customer and driver by driver. Some customers have also approached us having realised the savings possible by switching to EVs and sought to terminate vehicle contracts early - maybe 18 or 24 months."
EVs have been more visible on fleets' radar for the past few years, as they offer potential savings when deployed correctly, although for company car drivers, the drop in tax liability is more significant. JCT600's fleet customers have been keen, says Caddick, to take advantage of savings where possible.
"They want to deliver savings to the whole employee base where they can," he says. "If they can do something that isn't going to cost them more, why not? Employees notice when colleagues are taking delivery of electric cars while they might have recently been given a car that they pay £400 a month on, so this has to be managed too.
"Running costs in life alone make it attractive, but it's also about getting the cost of the vehicle to the right level to encourage adoption, and it's surprising how quickly that has happened. The wider reasoning of environmental considerations come into it, but the cost is a big factor.
"We need to decarbonise and this is why the government is incentivising it. People are following this path because they've seen others do it. There are still customers who are cautious from a business operation point of view, but they are interested."
However, Caddick believes there is an imbalance in the current offering of electric cars, with much more choice at the high end, while there is still a lack of obvious EV replacements for the typical workhorse estate.
"There's perhaps not as much choice as we'd like to see in the £25,000 to £35,000 bracket, and P11D levels among companies have increased just to accommodate new EVs," he says. "While the costs of operating these cars are often higher than would be preferred.
"There is still a gap in what I think would be an EV replacement for a Skoda Octavia estate, for example, comparing price and capability.
"It's encouraging that more EVs are coming and there are some big fleets have been early adopters and if they can do it, it will work for most others. Salary sacrifice is back with a vengeance, while in some cases cash-for-car still works. There's no one-size-fits-all solution."
No doubt the situation will improve as we approach the government's end of ICE new car sales deadline of 2030, but compared with the multiple challenges of recent years, Caddick is unlikely to be fazed.
"There's always been huge amounts of change in the industry, and we've always been very well placed to adapt to change," he says.