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Fleets undergoing fundamental shift in post-pandemic funding

Businesses are embarking on a fundamental change in vehicle funding according to ARI, which has doubled the size of its finance-leased fleet in the UK in the last year.

And David Bushnell, product manager – mobility, Alphabet GB Limited, has warned that the Finance Bill announcements have now led to discussions over ‘cash versus car’ as companies weigh up which one they choose to offer

ARI says it’s seen has been a marked rise in the number of fleets looking for flexible leasing options and has doubled the size of its finance-leased fleet in the UK in the past year

According to ARI, the impact of the pandemic – allied with the transition to electric – means that current fleet setups may no longer be fit for purpose, both in terms of current vehicle provision and established funding contracts.

On the back of this, ARI says it’s seen has been a marked rise in the number of fleets looking for flexible leasing options. As well as offering multi-bid leasing system for contract hire, the business offers finance lease and has reported an 80% rise in enquiries for its FlexLease finance lease product over the past 12 months. It’s also doubled the size of its finance-leased fleet in the UK in the past year.

ARI MD Nick Caller added that the changes in fleet operations as a result of the pandemic have led to a widening disparity in the usage profiles of cars and vans on fleets – and said that one funding method is unlikely to cover all eventualities.

“Many customers have asked the question: what is the next five years going to look like for us? We still need vehicles, but the pandemic has proved there are lots of different ways of doing things that may be more time- and cost-efficient. So why are we paying fixed contract hire rates and maintenance packages for a service we no longer need as much? In many closed-end leasing contracts, charges and margins can make up more than 15% of overall cost of ownership.”

He continued: “Contract hire undoubtedly served a purpose historically. But with legislation changes and the advent of electrification, all bets are off and companies will be spending the next few years learning again how they will use their fleets. So they need more agile leasing products that can adapt to changing circumstances and suit how they use their vehicles – not how it suits their leasing provider.”

ARI’s FlexLease finance lease product eliminates end-of-contract mileage charges and offers customer-controlled defleet options.

“This type of disruptive new product, possible by marrying technology and funding, allows customers to see and understand in real time all their costs throughout the lifecycle of the vehicles, and benefit from perfectly timed strategic decisions that maximise the return on their investment.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006.

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