Too many companies are attracted by ‘loss leaders’ and opt for the lowest rental rates when choosing a leasing company supplier rather than considering the whole life costs of running a fleet over its life, and in doing so end of paying far more than they need to – by up to 20% in some cases.
That is the view from Andrew Leech, business manager at Mycompanyfleet, the fleet software solutions provider and automotive division of NorthgateArinso, who says that the situation is exacerbated when only one leasing company is involved on a solus supply basis.
Then, the leasing company is able to increase monthly rates at will as the client company has no means of checking them against the market and is often locked into a financially uncompetitive arrangement.
However, by using the latest generation software systems, such as Mycompanyfleet’s FleetAcumen solution, fleets can benchmark rates from different suppliers to obtain a truer market overview of leasing rates. And they should also provide the functionality to interface directly with leasing companies’ own systems and achieve total transparency in the arrangement.
“Too many companies, in selecting a supplier, are sucked in by the opening rates on offer. But these are often ‘loss leaders’ intended to secure the deal but not intended to be the prevailing rates over the life of the contract. We estimate that fleets may be paying as much as 20% too much for their vehicles,” said Andrew Leech.
”A far more cost effective approach is to work with your software supplier to benchmark a number of different suppliers so that you build up a picture of the range of leasing rates that are available across the market.
“By using our fleet software, the fleet customer can also interface directly with the leasing companies’ systems to get an accurate and up to the minute on the latest rates for all of the vehicles available, so achieving total transparency and removing the shroud of mystery that too often cloaks these transactions.
“At the same time, extraneous charges such as early termination fees, end of contract charges and all other associated costs can be brought in to provide a total whole life cost scenario and create a clear picture of what the vehicles cost over the life of the contract – rather than just the headline rate.
“That way, effective management decisions can be taken over choosing the most suitable suppliers to meet your vehicle and funding requirements for the long term,” he added.
FleetAcumen can also help fleet users spot any exception that occurs to pre-agreed contract charges or terms, as it uses Mycompanyfleet’s acclaimed exception reporting methodology within a highly visual dashboard environment to highlight areas that require immediate management attention.
“So should charges come in from the leasing company that are outside the pre-agreed limits, they are immediately flagged up as requiring further attention or investigation – a form of early warning system for fleet managers,” said Andrew Leech.
