Public sector ponders exiting leasing in favour of grey fleet
19 April 2011
Some public sector organisations could exit leasing contracts in favour of a complete grey-fleet approach to employees, according to Leaseplan's public sector specialist Stuart Walker.
"Grey fleet is a really interesting point; we know of some public sector bodies thinking of getting out of their lease contracts entirely and going to grey fleet," Walker told BusinessCar. "There are early signs - we know at least a couple are considering it."
But Walker warned that the move could be a false economy. "You base that calculation on usage on the current day, and moving to a grey fleet pence-per-mile approach on the face of it suggests a saving; but people will change their behaviour going forward if they are using their own car," he warned. Other worries surround the duty of care risks of letting more drivers use their own vehicle, and the environmental impact, as company cars are generally newer, cleaner and better maintained than privately owned vehicles.
Walker has headed up Automotive Leasing, the division at Leaseplan that deals with the public sector, and said outsourcing will become more common among public sector fleets. David Cameron is known to be pushing the sector towards outsourcing more services, and a white paper is due to be released in the coming weeks on the subject.
"If you compare the penetration of outsourcing in the public and private sectors, ball park figures it's about 60% of fleets in private sector and 20% in public," said Walker. "In terms of councils, the complexity of fleet is much greater than some other fleets, commercial vehicles for example. However, the scale of savings public sector has to find will question the old methodologies of fleet management in the public sector and Cameron's white paper is evidence of that."
Walker's comments come in the wake of a warning from Lex Autolease boss Rick Francis that public sector fleets will become less attractive to leasing firms if they continue to move to a price-only decision-making process, and don't take bolt-on services such as maintenance (BusinessCar 5 April). Francis, whose firm is historically one of the three biggest players in the public sector along with Leaseplan and Hitachi Capital Vehicle Solutions, said price-led moves in the public sector will lead to reduced competition.
Leaseplan's Walker said salary sacrifice could be a "nice halfway house between grey fleet and lease solution".
"There are exceptional cases in every scheme but the cost savings from salary sacrifice, not least from a NI perspective, are pretty significant and enable public sector body to maintain front-line services while offering employees benefits," he said.
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