New study shows huge savings achieved by European fleets through contract extensions
A new study by the firm shows that the average contract increased by four months between 2007 and 2009, leading to savings of almost €1.5 billion in 2009. The company, which is one of Europe’s largest fleet management companies and one of the leading providers of financing to European SMEs, added that extending the duration of an operating lease from 36 to 48 months saves a company an average of 12.5% per month on the leasing cost.
The study by GE Capital’s Key Solutions fleet consultancy arm is based on data from over 200,000 company cars managed under an “operating lease” arrangement across seven markets in Europe. The report looked at how contracts had changed between 2007 and 2009 and then used the conclusions to estimate the impact across the entire operating lease fleet of 6.6 million cars in those markets.
'Over the last two years, extending contracts to control fleet costs has been prevalent throughout the industry. Extending a lease by 12 months can drive down the monthly cost of a company car by 10 to 15%, and our research demonstrates that it has been a high priority for companies looking to control costs in response to the downturn,' said Peter Stroem, Pan-European Fleet Commercial Leader at GE Capital. 'French companies were particularly active in this area in 2008 and 2009 as they took advantage of their traditionally shorter-term leasing arrangements to drive huge cost savings.'
According to GE Capital’s study, the average contract duration increased from 36.7 months in 2007 to 40.5 months in 2009 across the seven markets studied.
French companies achieved the highest levels of cost reduction via contract extensions. Average contracts in France increased from 31 to 39 months between 2007 and 2009, German companies saw average contract duration increase from 39 to 41 months.
Companies in the UK and Italy have extended contract duration less. In the UK, companies increased the average length of time a company car was leased from 35 to 36 months, whilst in Italy companies only extended average contract duration by 15 days, from 41.25 months to 41.75 months.