Fleet replacement cycles no longer clear-cut
Fleet vehicle replacement cycles trends are becoming less clear-cut with some experts saying more businesses are turning to longer or more flexible cycles while others state that traditional models are being retained.
On the one hand, Meridian Vehicle Solutions, a new company which specialises in medium term rental solutions of three to six months, says the three-year-60,000 mile model is slowing dying as fleets demand more flexibility, leading to a much wider range of products in the market. This is being helped by carmakers willing and able to offer deals based on shorter-term leasing cycles.
Meridian Vehicle Solutions added that current economic conditions are also leading businesses to adopt a wait-and-see approach to this year on all areas including capital investment.
Meanwhile Arval says its research indicates that car and van fleets are extending replacement cycles. Carried out last year as part of its Corporate Vehicle Observatory Barometer, the analysis found 21% of fleets operating cars and 25% of those with vans reported that cycles have lengthened. The trend is consistent across fleets of different sizes and, according to Shaun Sadlier, head of consultancy, is being driven by improved reliability of modern vehicles.
Yet auction specialist Aston Barclay says fleets are refraining from extending replacement cycles to four years and beyond as they look to ensure the company car remains as a powerful part of an employee’s package.
The firm’s latest figures show the average age of fleet cars sold in Q4 2016 – and the year as a whole – remained static at 38 months.
“Good people are in high demand across all industry sectors currently and companies are being extremely careful to maximise all elements of an employee’s package, in particular the company car,” explained Martin Potter, Aston Barclay’s group operations director. “In our experience, extending replacement cycles could impact employee retention or recruitment when rival companies are offering them the chance to replace their car more frequently.
“Manufacturers are also keen to keep fleets at or around the 36-month lifecycle to ensure they continue to buy new cars on a regular basis,” he added.
Perhaps Alphabet best sums it up though by saying there’s no longer a ‘one size fits all’ approach to replacement cycles.
Clive Buhagiar, head of pricing and planning, said: “The picture out there is mixed. We’re aware of some customers who are pulling orders in early and are really pushing to get vehicles ordered before the start of the next tax year. We know of other customers who are holding off and looking to get some breathing room in order to make a more considered decision – and so are either looking to extend their current lease agreements or are using flexible, extended rental such as AlphaRent+ to buy some time.”
He added: “The long and short of it is that there is uncertainty and confusion out there due to the Autumn Statement particularly, the Finance Bill and the wider economy. So some customers are rushing to do as much as they can in a short space of time while others are trying to buy themselves more time to get more insight to inform their decisions. Each customer has their own reasons for doing so and their approach reflects their wider corporate or organisational strategies in what they are setting out to achieve in 2017 and beyond.”