Long lead times to become the norm
06 May 2011
Author: Hugh Hunston
Extended vehicle lead times will become the rule, rather than the exception, according to business car management and leasing specialist, Fleet Alliance, which called on customers to think further in advance about placing orders if they wanted to get the cars their drivers selected.
The conclusion follows an internal survey on order-to-invoice lead times over the past 15 months, which showed the average period for new vehicles ordered by Fleet Alliance grew from 84 days in 2010 to 94 days during the first three months of this year.
The equivalent period for new vehicles in the pipeline has stretched further to an average of 115 days per vehicle.
This trend been aggravated by the effect of the Japanese earthquake on vehicle and component supplies and compounded by demand in the "highly lucrative" Chinese market.
Fleet Alliance has told its fleet customers that while it was working closely with dealers to source chosen vehicles in line with clients' requirements "it is important that you review your vehicle choices as early as possible".
To shorten the lead times the company will contact clients six months before contracts end "in an effort to mitigate any potential delays", a request described by managing director Martin Brown as "not unreasonable".
Brown admitted that the company's new vehicle order situation was "skewed" because of its customer demand weighting towards VW Group vehicles. The group's brands are among those most affected by a lack of supply relative to demand at present.
He warned: "Lead times across the board are getting longer for all makes and is likely to remain so." Carbon-based tax regimes applied in growing numbers of European markets are also placing a premium on higher-demand lower CO2 models.
Lead times are, in the short and medium term, likely to be further disrupted by the Japanese earthquake, with the car industry still assessing the impact of the disaster. The domestic carmakers are still trying to get back towards anywhere near full production,
while many other brands have been affected by severe disruption to parts supply, the impact of which is still filtering through the production process.
Japanese brands Toyota, Nissan and Honda are predicting that it will be the end of 2011 before supply returns to normal. Plants in Japan and Europe have either throttled back to around 50% capacity or closed for longer than was originally planned around the Easter period to avoid running low on components.
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