Multi-bid fleet acquisition most effective way to cut costs, finds new white paper
Multi-bid fleet acquisition policies could provide a vital method to cut costs for fleet managers looking to drive savings in the current economic climate environment.
According to fleet management firm CBVC Vehicle Management, multi-bid is the most effective method to keep downward pressure on fleet costs; it says the procurement method can bring leasing rate reductions of between £20-£50 per month compared to other methods, as well as reduced exposure to risk.
Mike Manners, managing director of CBVC Vehicle Management, explained: “The benefits of multi-bid is that fleet renewal requirements are put before a panel of funders and the cheapest on the day wins the business.
“It means that fleets always benefit from the best value, delivering significant cost savings.”
The findings have been set out in its new white paper on ‘The Benefits of Multi-Bid Vehicle Funding’, written by significantly experienced fleet and leasing specialist Keith Allen, who joined CBVC earlier this year as a consultant, drawing on a background that includes managing director roles at ARI Fleet and ALD Automotive.
Allen outlined: “Relying on one provider puts you at risk of ‘rate creep’ along with exposure to their risk profile. Both factors can severely impact business contract hire rental rates. By spreading your risk over a panel of funders eliminates these risk elements.
“Using a fleet management provider that has the ability to deliver multi-bid acquisition, provides one point of contact but transparent pricing, reduced lifecycle costs and enhanced service levels.”
The white paper examines the different methods of vehicle acquisition and sets out sole supply leaves fleets exposed to short-term pricing strategies and rate fluctuation following residual value reviews while multi-supply acquisition means fleets are faced with multiple contracts, invoices, and relationships to administer.
With multi-bid acquisition a fleet can competitively procure business contract hire quotations from one fleet management company with a panel of approved lease companies. Among the advantages are cost optimisation on each new vehicle order and more consistency in the total cost of ownership with a single point of contact.
Keith Allen concluded: “If you are running a fleet of say 400 vehicles, then over a four-year term you could potentially be saving more than £380,000 based on a cost saving of £20 per month per vehicle by adopting a multi-bid approach to procurement. The benefits to your company’s bottom line cannot be ignored. And nor should they.”
To access the white paper on multi-bid acquisition, click here.