Overview: UK Fleet Market
The UK market sees approximately 2 million new cars registered every year, with around 50-55 percent classified as fleet business vehicles depending upon definition.
The Society of Motor Manufacturers and Traders’ (SMMT) latest data on new car registrations bears testament to the fact that fleet is growing, according to Matthew Dyer, commercial director LeasePlan UK.
“The key for providers is that they continue to be flexible to their customers’ changing circumstances and innovate to deliver what they need,” Dyer advised.
However, the challenging UK economic climate is expected to continue in 2013.
“While I believe there will be a degree of growth overall, it is likely that businesses across the country will still face strong headwinds,” according to Matt Dyer, commercial director for LeasePlan UK.
So far, according to Dyer, the industry, as a whole, has shown resilience and an ability to adapt to a changed market but fleet needs a stable, strengthening economy in order to grow long-term. The current uncertainty is impacting corporate investment and this raises concerns over secondhand vehicle prices, as well as potential SME debt challenges.
“The growing demand for commercial vehicles is most beneficial to LeasePlan UK. Companies looking at leasing for the first time are also an important, valuable area. Our experience over the past 18 months shows that customers are looking to boost their own productivity by outsourcing fleet, meaning that we are seeing significant growth in full outsourcing services,” Dyer said.
Fleet policy in the UK increasingly requires the need for detailed financial modeling and total cost of ownership (TCO) analysis, as well as expertise to deal with a wide range of tax issues, a changing regulatory environment, the green lobby, and duty of care legislative drivers.
Accurate mileage capture will be a key focus for fleets in 2013, a need driven not only by a desire to control in-house costs but also to protect themselves from tax authorities increasingly looking to clamp down on inflated mileage reimbursements paid to car drivers “tax-free.”
There is also likely to be a further outsourcing of fleet services in 2013, due in part to the ongoing trend of reductions in organizations’ in-house fleet management teams.
For many fleets, a balance will have to be struck between cutting costs while retaining quality of service and employee engagement.
“Contract hire remains the favored method of vehicle acquisition and, while it is the largest market for operating leases across Europe, growth has been impacted by the economic recession. However, with the tough economic environment leading to a reduced appetite for risk, liquidity remaining key, and cost control the No. 1 priority, contract hire’s popularity will continue for the foreseeable future,” according to David Yates, marketing director for ALD.
Telematics has now broken through into the mainstream and is no longer the preserve of large commercial fleets which need to keep track of their vehicles. Companies of all sizes are realizing they need better tools to manage the growing cost of their fleet and, for many, telematics is now seen as the best option.
“Telematics not only provides a solution to reduce costs, but also a fully auditable solution to avoid a lengthy, and potentially costly, tax investigation,” Yates said. “But, drivers are also now embracing the many positive benefits telematics can offer and the ‘big brother’ factor has subsided. Telematics in the UK is no longer a future fad; it is ‘here and now’ and vital to an efficiently run fleet.”
Overall, managing UK fleets is becoming more complex and decision making is moving up the management hierarchy.
--By Mike Antich