REMARKETING: A case of damage limitation
29 January 2015
Ogilvie Fleet managed to reduce its end-of-contract disputes from its fleet of 11,200 vehicles to just 2% after taking a "total transparency" approach. The leasing company discusses the damage charges with those customers and agrees a fee acceptable to both parties.
In 2014, a total of 61% of Ogilvie Fleet's defleeted cars and vans attracted no charges. The average cost per vehicle across the 39% where damage charges were levied was £259, while the average charge across all defleeted vehicles was £100.
Irrespective of whether a company car is a supermini or from the executive sector, the firm's end-of-contract damage recharge costs to return a vehicle to British Vehicle Rental and Leasing Association 'fair wear-and-tear standard' are £75 for a door panel, front wings and rear quarter panels, and £120 for a bonnet, boot lid, tailgate, bumper or roof.
Similarly, for light commercial vehicles, sample recharge prices include: £75 for door panels and front wings; £120 for side sliding doors, large side panels or bonnet, tailgate and bumpers; and £250 for a roof.
Other charges include alloy wheel refurbishment (£35), full valet (£40) and windscreen chips (maximum three - £40).
Jim Hannah, Ogilvie Fleet's operations director, says: "We want customers to have a pleasurable experience when they lease vehicles from us and not for it to be tainted by a battle over end-of-contract charges.
"In our experience, an increasing number of our competitors are looking to make money at the end of a contract via damage recharging. Those leasing companies view end-of-contract charges as a profit centre, which is a very short-term strategy and something we deplore."
According to Hartley, most ex-fleet vehicles are returned to auction, rather than directly retailed, so buyers can decide what repairs to undertake prior to onward resale.
Lex has a flat policy of not repairing vehicles prior to them being remarketed, so it's in the best interests of fleet drivers and Lex to make sure there is as little damage as possible, to reduce costs for fleets and to maximise values for the leasing company.
Hartley says the firm put the no-repair policy in place as its experience indicates that, in the majority of cases, the cost and delay incurred in undertaking repairs typically exceeds the incremental benefits you gain back when the vehicle is sold.
Speed to sale is important for retaining values at auction, but there is also a part to play with stock coming to market in ready-to-retail condition.