Contract Hire and telematics seem to have been made for each other. The profit element of contract hire relies on residual value and residual value relies heavily on how the vehicle has been maintained. So contract hire providers have an interest in monitoring when servicing is due and whether it has been carried out.
Part of the contract concerns annual mileage and while a good customer and a good contract hire company will try to estimate annual mileage as closely as possible, vehicle usage can change and even the best-laid plans can look different a few months into a contract. If mileage starts to accumulate at a greater rate than originally anticipated, the customer needs to know and a good contract hire company will want to help the customer minimise excess mileage charges and any other potential end of contract penalties, by comparing actual and expected mileage and flagging up differences as soon as possible.
From a fleet manager’s perspective, keeping tabs on an entire fleet’s mileage and repair and maintenance records amongst other things, is a potential headache, so if some of these issues are automatically being watched as part of the contract, life could become a little less fraught.
LeasePlan is not the first company to incorporate telematics in a contract hire package, but the company has spent some time assembling a package. The result, UPtime was launched at the CV Show in April, using the system developed by iFleet to aid contract hire management. It’s aimed at reducing downtime for van fleets. LeasePlan says that a three-month trial with 20 customer vehicles could lead to a 60% cost saving for clients. VFW caught up
with LeasePlan’s head of Commercial Vehicles, Mark Lovett at the CV Show:
‘We’re recognising that the van market is a market in its own entity now. Historically, it’s been the car and van market, or the truck and van market and vans have fallen through the slats. We’ve taken a view that the van market has operational characteristics far more in line with the truck market than the car market. So whether it’s a car-derived van or a three-and-a-half tonne tipper, it is doing a job of work for the operator and any time that vehicle is not working, it is costing the operator money, whereas when a car is off the road, it’s an inconvenience, but it’s not having such a financial impact on that business. Therefore the two areas where we needed to demonstrate how we are changing our approach to the business for our van customers was in VOR management and in the contract.’
With UPtime, the telematics package is used to record mileage every 24-hours. ‘This enables us to say, ”This vehicle is due for a service/MOT/safety inspection”, or whatever it may be’, says Mark. ‘We will identify in advance when that needs doing and then we’ll be proactively booking that vehicle in through one of our approved commercial vehicle specialist service and repairer network.
‘These are people that have that ”HGV-Savvy”, and can say, ”That’s a commercial vehicle”, whether it’s a Kangoo-sized van or a large van, ”I need to get that vehicle back on the road ASAP.” With UPtime, we can book that vehicle in for an hour, knowing that it will be in for the hour and back out again. Traditionally a van will go into a dealership for the day and it’s lost for the day, and we know that average industry accepted downtime cost on a van is between £700 to £1,000 per day. If that is the true cost of the vehicle being off road, that can have a huge financial impact on the efficiency of that business.’