Head of commercial vehicles Mark Lovett is looking to win van fleet business.
How long have you been in your current job?
What does your work involve?
The development of LeasePlan’s commercial vehicle strategy, heading up our specialist commercial vehicle team, and through improving our customer service propositions, growing our funded commercial vehicle fleet.
What are the benefits of leasing vans over outright purchase?
There is less risk to the operator – leasing vehicles means off balance sheet funding and a known fixed monthly cost of van fleet operations. Leasing also minimises the amount of administrative burdens that running a van fleet requires. There is also the support and reliability that leasing offers and the ability for operators to use their cash for other business critical investments while the cost of the vans on a monthly lease doesn’t eat into those funds.
Why do more than half the UK van operators still buy vehicles outright?
Many (particularly smaller) van operators are unaware of the advantages of leasing and don’t believe it’s a viable option for operators other than large corporate fleets. Others see leasing as hire purchase and don’t think it’s suitable for their business. Where the benefits of leasing are not sold correctly, operators have a perception that there is a high risk of end-of-contract damage charges, and hold the view that it’s better to own their van, and ‘run it into the ground’ which is a false economy!
You launched a new product at the CV Show. How much does it cost and what are its potential savings?
UPtime is our innovative product for commercial vehicle fleets. It maximises vehicle uptime, reducing downtime and costs associated with downtime. Dependent on fleet size and profile, UPtime is available for less than £30 per month.
What makes this product different from others?
Where UPtime differentiates LeasePlan from our competitors is in the way that it provides a genuine and credible pro-active approach to VOR (vehicle off road) management. Using telematics data, we capture the vehicle mileage every 24 hours and then plan each service, inspection or other scheduled event around the operator’s working patterns. Using UPtime, our service repairer network that supports the product applies an HGV approach to LCV maintenance; examples being the ability to book a vehicle in for repairs for hourly slots rather than losing a vehicle for a whole day. From the moment a vehicle arrives in the workshop, it is progress chased until completion and all service documentation is electronically stored. With UPtime, the van fleet operator no longer needs to worry about when a vehicle’s next service or scheduled event is due, they don’t have to book vehicles in and they don’t need to chase to find out when the vehicle will be ready.
Many fleets are now looking to leasing companies as business advisers. Why is this happening and what type of advice and support is being sought?
Running a fleet of commercial vehicles is a complex task and becoming even more so, particularly in the light of increasing legislation, duty-of-care obligations and compliance management. For many operators, van fleet management is something that has to be done as a result of using their vans as business tools. In recent years, the role of a traditional fleet manager has disappeared in many large companies. Consequently, we’ve seen more HR managers and procurement teams becoming responsible for van fleets, but it is not their core business activity, whereas it is ours. So the leasing providers are being tasked with providing these companies with all the information needed to run an efficient and compliant van fleet.
How many vans does LeasePlan hope to have?
We have more than 34,000 vans on our fleet, and a Business Plan to significantly grow that volume over the next three years.
It looks as though the double dip recession is going to go on for a while. During the first dip we saw companies extending replacing cycles – what impact do you expect this second dip to have?
As the economy remains unpredictable we are seeing that many van fleets have to do something to keep their vehicles reliable and able to do the required job. Ongoing contract extension isn’t necessarily the viable option if the vehicle contract has already been previously extended. This is where a leasing provider can become a true trusted adviser and provide expertise on the most cost-effective solution. We are also seeing some customers, who have survived the first wave of recession, investing in their vehicle fleet, recognising that their business model has been strong enough to survive the harshest of economic times and now ready to grow their business.
Some fleets operate five- or six-year replacement cycles which they say reduces costs, but others replace every three years to take advantage of technology advances on safety and fuel efficiency. What advice do you give on how long to keep vans?
Part of the LeasePlan consultative sales approach is to fully qualify our clients’ and prospects’ van fleet needs. As a result of such detailed qualification, we consider the type of use and fleet profile, in order to come up with the most cost-effective solution for a business application. In some instances and markets, a five- or six-year replacement cycle would be recommended, in others, a three- or four-year cycle would be most efficient. Our current average contract term on commercial vehicles is just under four years.
What is your own opinion of electric vans as fleet alternatives, how many does LeasePlan have on its books and what do you think their future in fleet will be?
We currently have a small number of electric vans on our fleet (and some electric cars too). Of late, we’ve seen the Renault Kangoo van rise in popularity as an electric option. We always ensure that an operator’s vehicle usage is thoroughly qualified before recommending an electric vehicle. Many fleets initially express an interest in running electric vans as an answer to reducing their carbon footprint, reducing fuel costs and ticking certain corporate ‘green boxes’. However, we always stress that an electric vehicle may look good on paper, but the full practicalities of running them, especially the infrastructure support have to be considered before committing to them on the fleet.
Where, then, do you see the future of commercial vehicles lying?
In the short term, I see the future fuel of choice for the majority of van fleet operators will remain diesel. Some smaller vans are reverting to petrol of course, but as for true alternative fuels, there are so many external factors at play, including of course, government grants, taxes and infrastructure that to predict the long term future is very subjective!
How do you see the van leasing sector in 10 years’ time?
We see van leasing continuing to be a viable method of vehicle acquisition and management. We predict that the market will develop further as more van fleet operators are educated on the advantages of leasing. We envisage less leasing companies as more are bought out or merged with others. We believe that the leasing provider of choice will be the one that demonstrates its understanding of the van fleet being a true commercial vehicle fleet and offering customer service propositions such as UPtime to respond to those operator’s challenges. With the right understanding of the van fleet market, leasing will become a more attractive offering to the van operator.
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