Posted on 09/06/09, filed under Other News | No Comments
According to the Fleet News Confidence survey, 36% of fleets have extended their vehicle replacement cycles in the past year.
A further 29% are considering extending their change cycles over the next 12 months.
Surprisingly, though, just 7% believe extending their replacement cycle will bring about the biggest cost savings this year.
For outright purchase fleets, the decision about whether to extend or not comes down to one simple calculation: the initial one-off financial saving versus the rise in SMR costs and the fall in re-sale values.
This saving can be substantial, as BCA found out recently.
For leased fleets, it’s not quite so straightforward. Caution is required.
The monthly leasing rate is set at the start of the contract based on the agreed vehicle lifecycle, say three years.
Beyond that point, the cost profile changes: generally, the car will depreciate less with age but cost more to maintain.
In a lease, depreciation and maintenance are averaged out over the course of the contract.
However, a car depreciates considerably more in the first couple of years than over the next few.
Paying for depreciation
So effectively, if you are paying the same price for a rental in an extended fourth year, then you are paying for depreciation that has already been covered.
In fact, paying the same rate means you may be subsidising some of the loss the leasing company was about to make on lower than expected residual values.
Posted on 08/06/09, filed under Other News | No Comments
The scrappage incentive scheme that came into effect on 18th May and since the announcement in the Budget over 35,000 orders have been reported to BERR.
Over the first five months of the year the new car market is down almost 290,000 units, and down 555,663 units to 1.842 million units on a rolling annual basis. May’s figures confirm the 13th consecutive monthly decline in new car sales volumes.
The fall is evident across all sales types, although in May private demand was down only 13.8% in comparison. In part this reflects the fall in private demand last year, but is also likely to be an early sign of revival under the scrappage scheme.
Diesel penetration fell for a second successive month, from 44.8% in May 2008 to 44.0% this May. This reflects the shift towards smaller cars, which tend to be petrol engined.
The mini segment was the only segment to record volume growth, up 50.3%. The supermini segment saw market share rise, from 32.2% to 34.6%, and Ford’s Fiesta was again the overall market’s best seller in both the month and year-to-date.
