INSIDER: Clearing up the empties from a new year hangover

Date: 20 January 2009

The Insider is a fleet manager with years of invaluable experience

This time it's what to do with spare cars following redundancies. The firm's in engineering and we're feeling the ripples from the downturn as socking great tsunamis over here, especially the people we've had to let go.

So I'm about to be left with lease cars with no homes to go to. Handful of Vauxhalls, few Fords and the odd Audi. Of course, the first call was to the leasing company, and you can imagine the teeth sucking that crackled down the phone line when early termination was discussed. There are fines to pay, but they're not sure exactly what yet. The account manager spoke of sending the cars off to auction and working out what we owe based on the figure they sell for. Right there I know I'm screwed - I'm fairly sure a two-year-old Vectra will fetch far less than their 2006 prediction for a three-year-old with 20-odd thousand extra miles on the clock.

I thought briefly they might decide imposing fines would be mean-spirited and not good for future relations, given that we're getting buffeted by the same shockwaves as everyone else. But once I'd stopped chuckling at that idea, I knew I had to keep the cars.

It's not going to be easy to administer, but I'll replace some of the cars we thought we were going to extend the lease on and the rest I'll let the former keepers hang on to until we need them again (the cars, not the staff. We're trimming for the long-term here). Not quite sure yet how to figure out the tax on a car run by someone who doesn't work for the company, but I'll make it happen. That's the great thing about cars you own. You've got all the flexibility in the world when it comes to disposal.

When we're finally in a position to go back to the lease company for new business, I can just imagine the hard-sell we'll get for early-termination insurance, which will bump up the cost even further. It's got me thinking how much more expensive leasing will be in the future. It has all the makings of a perfect storm. The glut of new cars will have vanished as we feel the effect of the factory shut-downs. So cars will be expensive, but unless the inter-bank lending rate comes down drastically, so will the money to pay for them. Couple that with general caution and pessimism about residuals and, well, anything in the future really, and we could be entering the era of horribly expensive lease rates.

Perhaps us fleet managers are about to become car dealers again. Buying, selling and general wheeler-dealing to get the best prices and retain maximum flexibility. Make it all about cost and sod the prestige. One upside to this downturn: no more complaints from drivers about the car they're assigned. They're just happy to still have a job.

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