In Focus: JCT600 VLS
04 July 2022
Author: Martyn Collins
The fleet industry has faced significant challenges over the past five years. Martyn Collins speaks to Christopher Caddick, head of business development at JCT600 Vehicle Leasing Solutions about how they are handling the current vehicle shortage.
No question, the fleet industry has faced significant challenges over the past five years from WLTP, Brexit and the pandemic to the semiconductor shortage, lack of delivery drivers and now the war in Ukraine. Each factor has had an impact on the current vehicle production situation; however, the build-up of challenges has resulted in one of the most difficult journeys back to what we were used to.
JCT600 VLS head of business development Christopher Caddick says: "It is estimated there are around two million less vehicles on the road than there would have been as a result.
"This is of course having a huge impact on the fleet industry. With average lead times for new vehicles now quoting 2023, drivers are having to wait longer and longer for orders, vehicles are being discontinued with no notice, prices are increasing, and manufacturers are reducing or stopping support terms mid-cycle.
"Many of our customers are wanting to make the move to electrification, especially as it can create vast cost savings for both the business and driver. But, with the current excessive lead times, businesses and drivers will not see these benefits for another 12 months in some cases.
"As the cost of living continues to rise, there is more pressure than ever on businesses from employees to save money. The longer lead times are also creating additional costs as current vehicles get older and become subject to higher tax, as well as requiring more work and causing downtime. We are in a supply versus demand situation, which is affecting prices. The lack of vehicles has not only driven up used car sales, but also short-term rental costs and availability. "
Caddick is the first to admit that a lot of that is out of his and JCT's control when it comes to lead times and vehicle availability. However, he was keen to point out that they are doing everything they can to make it as easy and stress-free as possible for customers.
He says: "Communication has been key in updating customers on what is happening in the industry. Our account management team is putting extra effort in to support customers around lead times, bringing forward renewals and new vehicle orders. Furthermore, we offer a pre-order qualification to verify lead times and review any options/alternatives.
"We maintain regular contact with our daily rental providers to ensure we can keep up with demand. And where customers' leases have expired and they are awaiting delivery of a new vehicle, we have provided two types of extensions - informal and formal, using a true to market calculation to meet different customers' requirements.
"We have also just launched a new order updates section on our website so that drivers can log in at any time to get the latest updates on their vehicle. This is the exact same information that our team sees and gives drivers access at all times without having to contact their dedicated account manager for the latest information.
"While some may have used this situation to make more money from customers who fall outside of their contracts, for us, helping our customers through a difficult situation, that is out of their control, is more important and aligned with our values. We put the customer at the heart of everything we do."
Despite all of this uncertainty, Caddick tells us that there have been more drivers than ever wanting to come back into the "comfort blanket" of a company car scheme - especially electric vehicle schemes via salary sacrifice, that are seeing significant cost savings for both businesses and drivers.
He says: "The industry challenges have definitely helped to speed up the transition to electrification as businesses are considering their next car schemes earlier than they would have to to avoid disappointment and delays. And with the vast cost savings to be had with electric versus internal combustion engines from a tax point of view, as well as the higher value of the vehicle, it's offering businesses much more attractive car scheme packages
Talking of salary sacrifice, Caddick is keen to acknowledge its push towards electrification in the fleet market, by enabling a wider ranging car scheme package.
He says: "Salary sacrifice has become a bit of a buzz word in our industry at the moment, as more and more businesses are realising the huge cost savings to be made for both them and their employees when combined with an EV/PHEV choice list.
"We have also made it easier than ever for our customers when choosing a salary sacrifice scheme as it can be full managed via our bespoke online platform, Origo. Drivers can obtain quotations and tailored salary sacrifice illustrations to find the option that is right for them and their needs, before ordering through the system.
"In the past, salary sacrifice has been ruled out due to the perception of only being available for big organisations, or complicated to implement. However, by working with the right leasing partner, salary sacrifice can be simple, straightforward and a cost-effective solution for both the employer and employee."
Caddick tells me there is a definite appetite to 'go green' with their customers, as the benefits are so vast for all parties. However, he admits electrification of the fleet is not right for every business today, there is more demand than ever before.
He says: "The initial reluctance over the infrastructure and electric vehicle range are becoming less of an issue as drivers are better informed and embrace the behavioural changes required to run an EV. This is something we take a lot of time over, working closely with businesses and their drivers to ensure they fully understand the benefits, as well as the challenges before making the decision that is right for them.
"While the UK's road to zero is going in the right direction, the proof will be in the pudding once all of these vehicles have actually been delivered.
"There may be challenges in six to 12 months when there are more EVs on our roads, with infrastructures being put to the test. But our industry is extremely resilient, we're used to adapting to new technology, consumer demands and government changes. And as long as we all continue to work together and communicate, we will tackle it and make the road to zero happen."