In recent years, the company vehicle has been enjoying something of a resurgence. Employees have been increasingly turning away from allowances and heading back to the security of a vehicle that their company generally has to maintain and look after – and perhaps more importantly, they don’t have to worry about the thorny issue of depreciation. And it’s good for companies too; they can rest more easily, knowing that the vehicle is properly maintained and not over four years old. There is also evidence that providing a company vehicle is cheaper than paying out an allowance.
Flexibility vs. Tradition
Alas, even factoring in money-saving tools such as telematics systems and fuel cards, the appeal of leasing a long-term company vehicle has its own inherent problems. This is in part due to the 2-4 year contractual commitment required and the penalties that can be incurred if contracts are terminated early; neither is very reassuring in such financially fraught times. Instead, companies and drivers are beginning to turn to alternatives that offer better flexibility.
Short-term leasing is becoming more and more popular, despite adding up to 25% in cost when compared to a normal contract hire. Such rentals though are on the increase because people are able to lease their vehicle for 12 months or, in some cases, only when they actually need it. This kind of flexibility also means leasers can change their vehicles more regularly without facing stiff contract-cancelling fees.
Join The Club
Car clubs such as Zipcar (formerly Streetcar) have been popping up the length and breadth of Britain. A hit with private drivers who simply want to hire a car for as little as an hour as and when they need one, these clubs also offer accounts for businesses, and some financial controllers have been reaping the rewards. According to Fleet News, Surrey County Council has seen a 26% reduction on cost per mile since signing up with Zipcar – with their employees being forced to leave their own cars at home and picking up a Zipcar vehicle for business trips instead.
Car Pools In The Crosshairs?
One company claiming it is innovating in the leasing sector is Alphabet. Its AlphaCity pool of cars is available to customers who are prepared to pay a standard monthly contract hire rate but want to remove the need for their company to have its own pool. For a premium, everything from service scheduling and online booking through to customer services is provided by Alphabet meaning that even company fleet managers could become unnecessary. To ensure that drivers drive sensibly and economically, Alphabet’s fleet of cars (made up of BMWs and Minis) all come pre-fitted with telematics systems.
Into The Future
Further innovations are expected in the car-sharing sector. For instance, BMW has been running an innovative scheme in Germany in conjunction with Sixt that lets drivers locate the nearest short-term rental deal quickly without the need to book in advance. Other bright sparks are exploring the potential of cutting out leasing companies altogether and offering short-term rentals of vehicles direct from dealer networks.
However the leasing landscape changes over the next few years, The Fuelcard Company will keep you updated on the latest developments and will always be here to offer financial back-up courtesy of our range of fuel cards.