Multi-bid leasing can help insulate from market fluctuations, says Fleet Operations
The call comes from Fleet Operations as it highlights Office of National Statistics (ONS) figures indicating used car values fell 5.6% year on year in February.
In response, Fleet Operations said warned of the impact of any possible downturn in the residual value for fleets using contract hire, as well as outright purchase or lease finance agreements, as leasing providers adjust their offers to take account of the continuing fall in used-car values.
“Leasing providers do take residual value forecasts into account when determining the cost of agreements but this can only go so far in the face of a continued decline of used-car values,” explained Ross Jackson, CEO of Fleet Operations.
“It is important to note that residual values are not universally agreed and different leasing providers will apply different values to the same vehicle. In some cases we have seen discrepancies of up to £2,000.
“This means leasing costs will rise at different times, so companies can mitigate the effect of market fluctuations by using a multi-bid approach, which means they are not tied into a sole-supply agreement that requires them to buy new vehicles at a price set by a single provider. Instead, when adding new vehicles, their specifications can be put out to the market in order to obtain the most competitive price”
Multi-bid leasing allows operators to benefit from the lowest possible lease costs by searching for the best price on every vehicle in their fleet from different suppliers.
Each time a new vehicle is specified, the details are provided to a panel of approved and vetted leasers, which will each submit their best and final bid on every order.
It ensures there is a competitive bidding environment on every vehicle over the life of a contract and mitigates the effect of factors such as economic downturn or interest rate fluctuations on leasing costs.