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Fluctuations in costs facing fleets for rental and leasing are likely to continue for at least a year, it has been said.
The topic was one of those discussed at the Association of Fleet Professionals' (AFP) Annual Conference, held at the British Motor Museum.
During a discussion on dealing with rental and leasing costs, AFP board member and National Grid head of fleet Lorna McAtear said the market had been disrupted by factors including price reductions implemented by Tesla, and the arrival of more Chinese manufacturers in the UK.
She said: "I think we've probably still got another year at least of a bumpy ride when it comes to leasing costs and residual values, because we don't quite know what these Chinese manufacturers are doing with their price.
"They are coming in cheaper, which is great - upfront costs are brilliant. What that means is you've got some vehicles in the second-hand market that are still expensive with older tech, so actually somebody somewhere is going to end up taking a bit of a loss on those vehicles.
"Don't necessarily expect your leasing costs to come down immediately that you start to see these vehicles coming into the marketplace."
Also speaking on the panel, fleet management consultant Steve Winter said that there could be cost increases to come for both rented and leased vehicles.
He said: "Manufacturers are deciding they don't need to offer massive discounts - they can sell every product they have, at quite a significant margin for them, therefore rental companies are having to pay those margins as well.
"Who knows what will happen to RVs as we approach 2030 - RVs for diesel vehicles could actually increase more, as some fleets can't make that transition by 2030, perhaps, and they might hold onto some diesel vehicles for a bit longer. So, it's a really bumpy ride."
Among the other subjects discussed at the conference was continuing supply problems and long lead times for new vehicles, with Galliford Try Plant assistant fleet manager Emma Evans saying this was a particular issue with her car fleet.
She said: "We have put a lot of effort into keeping our drivers happy and informed in what's going on. We have seen our order bank increase phenomenally compared to where it was a few years ago, and the impact of that is that we actually employed additional resource just to be able to provide that link to our drivers, so that we can give them updates and chase manufacturers."
Evans explained that drivers were facing a financial cost to the delays, due to the higher BIK company car tax payments incurred by older ICE vehicles compared with new electrified models.
She said: "We have changed to a BEV and PHEV policy for our company car fleet, so our drivers find that really attractive. They want their EV company car with the ultra-low BIK, and they don't necessarily want to keep their ICE vehicle for longer, so there are some difficult conversations to have when there are delays."
Another hot topic at the conference was mileage reimbursement for EV drivers, with HMRC's Advisory Electricity Rate (AER) generally thought to not be suitable for drivers using public chargers.
Close Brothers head of fleet and travel Steve Cuddy said that his company had begun fully reimbursing drivers for their charging costs - a move effectively forced by employees' displeasure with the previous regime.
He said: "From about September last year we started to get a lot of noise from our drivers that it was costing them to do business miles, because they were back on the road and having to use public chargers. Before that it wasn't so bad because everyone was home and rates were a lot cheaper. We had to do something.
"We applied to HMRC for the exemption so that we could fully reimburse. Actually, it turned out to be a lot simpler than we thought.
"It was all based on that the employee and employer weren't earning money from this process, and that was really all we had to do. The other side of it was we had to prove we had a system in place to accurately record everything.
"The noise disappeared after the first month's reimbursement."
Cuddy explained that before the switch, drivers' discontent was delaying the fleet's electrification process.
He said: "We have 700 salespeople on the road using public charging. To begin with. because they weren't getting their money back, it stalled the EV transition.
"Because word got round that 'You're going to have to pay for business miles', they didn't want to change.
"From the moment we put [full reimbursement] in, our EV transition accelerated again within a couple of months."
AFP chair Paul Hollick told the conference that the organisation's members had helped it become the "most significant" professional voice in the fleet sector, three years after it was formed through the merger of ACFO and ICFM.
He said the AFP was growing rapidly, financially sound, and had plans to tackle a wide range of issues over the coming months.
He said: "While this is just the second AFP annual conference, it already feels like a well-established part of the fleet calendar.
"The fact that we are able to attract 300 members to this conference is a clear indication of the role that we play for our sector in helping fleet managers to meet the challenges they are facing head-on.
"The event's ethos of providing nuts-and-bolts guidance on current issues is very much based on a need expressed by many fleet managers to access practical guidance that can have a direct effect on the day-to-day issues they are encountering."
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