This article was first published in the April edition of Fleet News and Commercial Fleet. 

Faced with long lead times for new vans, fleet operators are being urged to order vehicles early to help mitigate disruption to supply. In the past, fleets would have typically faced a wait of up to four months from order for a new van to arrive.

That’s now extended to 12 months, with vehicle leasing companies warning delivery times are not expected to improve anytime soon.

Fleets have seen orders cancelled, models discontinued, and lead times extended, with trade body Association of Fleet Professionals (AFP) describing delays as a “nightmare”.

Jamie Williams, head of sales for large corporates at Arval UK, says that light commercial vehicle (LCV) supply has been “challenging” for a number of months as a result of a global shortage of semiconductors.

“Lead times are longer than they used to be, and we don’t see that situation changing for a little while yet,” he added.

To help reduce lead times, Arval is advising customers to order new vans as soon as they can, while working with them to define their strategy and vehicle needs.

“Almost as important as the arrival of new LCVs, is our work to help customers to optimise the management of their fleet,” said Williams.

“For example, scrutinising usage patterns and vehicle mileage can enable lower and higher mileage vehicles to be moved to where they are most appropriate, therefore maximising the value of the existing fleet.”

NEW LCV MARKET DOWN

New LCV registrations fell by almost a quarter (23.6%) in March to 40,613 units, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

March is conventionally a bumper period due to the introduction of the new bi-annual number plate, with more LCVs registered last month than January and February combined.

However, the SMMT confirmed that supply chain issues continue to hamper the sector, with the March market 38.6% down on pre-pandemic (2019) levels.

Newly registered large vans, which represent more than two-thirds of the LCV market, totalled 29,230 units, an 18.9% fall compared with March last year, while medium-sized vehicles weighing greater than 2.0-2.5 tonnes declined by 27.6%.

Small vans, meanwhile, decreased by 70.8% and pick-ups by almost half (48.4%). Recent high year-on-year demand for 4x4s also slowed, decreasing by a third (33.3%).

April, meanwhile, recorded a 29.1% drop in new van sales.

A total of 21,597 LCVs were registered in April, according to SMMT data, almost half the number that were recorded for March.

Liam James, corporate business development manager at Novuna Vehicle Solutions, is also urging fleets to get on the “front foot”.

“Make the important decisions now on the future renewal of your van fleet,” he said. “Fleet decision-makers need to be looking at not just the renewal but also the future growth requirements for that business to avoid future operational challenges.”

Lead times on its most popular LCVs – the Ford Transit and VW Transporter – are into 2023, explained James.

“We have had some shorter lead times quoted to us for plug-in and fully electric commercial vehicles. But that’s coming with a limited amount of allocation.”

VAN ORDERS CANCELLED

James says the leasing company has also had manufacturers cancel orders as vehicles are not available and they can’t be billed in that model year. “It’s not a regular occurrence,” he said, “but it happened to us very recently on a batch of 30 small, electric commercial vehicles.

“It takes a lot of planning to put those in place and for a customer to place that order and then for it to be cancelled is frustrating.”

However, he stressed: “They wouldn’t cancel an order unless it was the absolute last resort; they wouldn’t have long lead times unless it’s the absolute last resort.

“All of the manufacturing partners we work with are working extremely hard to try to fulfil the order banks they have and meet customer demand.”

To help alleviate the issue, James says Novuna has been doing a lot of work with fleets around fit-for-purpose and vehicle right-sizing.

“We’ve accelerated those to enable the fleet to be able to make decisions quickly to get a quicker place in the queue; placing orders sooner, gets it further up the queue.”

Contracts have also been extended by up to 12 months to deal with new vehicle delays.

STRATEGIC FLEET REVIEW

Matt Dillon, head of commercial vehicles at LeasePlan UK, is encouraging customers to “strategically review” their fleets to help identify efficiencies and challenge what is essential to meet their operational requirements.

“Flexibility is key to help ensure fleet managers make the most of opportunities available to them within the current range of models and specifications,” he said. “It’s crucial that fleet managers stay one step ahead of the supply disruptions.”

Chris Chandler, principal consultant at Lex Autolease, says the leasing provider is looking at what manufacturers its customers are working with and, according to their lead times, extending contracts where appropriate, and “proactively managing” renewal cycles.

“It’s all about managing duration; there’s not a lot that you can do about getting the vans quicker because of the semiconductor issues, so it’s about optimising for the customer, given the situation that we face,” he added.

IMPACT ON VAN ELECTRIFICATION

Is there concern that availability will slow the electrification of van fleets? “No,” said Chandler. “Sustainability certainly isn’t taking a backseat, it’s still the most talked about element within fleet operations,” he added. “The supply issue is across traditional fuels and electric.”

Registrations of electric vans rose by 17.7% year-on-year in March to 1,909 units. Compared with Q1 last year, electric van uptake increased by 68.9% to a market share of 5.8%, more than double a year ago.

Williams says that lead times with some electric LCVs is a little more positive compared with their diesel counterparts.

However, he added: “The technology in this space is still developing and, as more dedicated electric vans come to market, we expect customers will have more confidence to make the switch.”