INSIDER: Stick or twist? The choice is yours
16 October 2008
The Insider is a fleet manager with years of invaluable experience
Decisions, decisions. Being a fleet manager in the current financial climate ain't easy, particularly when it comes to the question of acquiring cars
Once again the job of a fleet manager is looking more like that of a financial speculator. Have residuals finally hit rock at the foot of the hole, or is the slime deeper than we thought?
Do we buy direct now when manufacturers are desperately off-loading stock built in a happier time, or keep the vehicles we have and wait until the used-price curve rises again?
Speaking to a chap connected with van rental company Northgate, I discovered that's exactly what they're doing: keeping vans longer than their usual 30-month fleet lifespan to offset some of the residual pain they're going through.
That makes sense. In the midst of all this financial turmoil, you want to avoid releasing cars and vans into a market that's ultimately being dictated to by millions of people sitting on their hands. Later on, when the troubles have eased, even if nationally we are still sitting in a cold bath at least people will be able to see the bottom and understand the depth of their problems to the point they can start buying again.
However, on the other hand you have manufacturers making all sorts of outrageous offers to shed excess stock. So conversely now is the time to bite before production cuts from the likes of Jaguar, Toyota and Land Rover trickle through. Yes, high-end brands such as BMW and Mercedes took a chop in the windpipe in the August sales figures - down 40% and 35% respectively - but I don't want to be buying just when demand picks up to overtake a now-constricted supply. That way not only do I not get the benefit of discounts, but I still make the same money as everyone else three years later.
Leasing also needs long-range interpretation. With banks so cautious about lending and the used car market so volatile, I'd say leasing rates are bound to go up as the leasing companies cover themselves on every limb. So you don't want to lock yourself in contracts forged in the heat of all the confusion, lumbering yourself with payments pushed artificially high by a fear tax.
Of course, the really bold have despatched someone off to the auction houses with orders to come back with 15 three-year-old Vectras of any stripe. Even though there are risks associated with that policy, that's a way of getting a nice little fleet for less than £50k. In times of struggle, there's always someone who prospers.