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January 26, 2012updated 12 Apr 2017 4:09pm

A roller coaster year ahead for fleet

Leasing and operating cost developments will be the driving factors for 2012, says Jens-Uwe Bergof JATO Dynamics. In Europe, the stagnation or decline in leasing volumes was less severe than the overall decline in new car sales, as B2B-clients, though looking at ownership costs, still renewed their leasing contracts. But what will be the developments and challenges for the lessor and the lessees if their focus is on ownership cost in 2012?

By Jens-Uwe Berg

Leasing and operating cost developments will be the driving factors for 2012, says Jens-Uwe Berg of JATO Dynamics.

 

Photo of Jens-Uwe Berg, market development manager of global leasing at JATO DynamicsIn Europe, the stagnation or decline in leasing volumes was less severe than the overall decline in new car sales, as B2B-clients, though looking at ownership costs, still renewed their leasing contracts.

But what will be the developments and challenges for the lessor and the lessees if their focus is on ownership cost in 2012?

The uncertainty of financial markets will persist throughout 2012. There’s also the possible effect on non-euro states, important for a leasing industry dependent on available capital and the ability to fund contracts.

If financial markets, and trust in them, are diminishing, there will be less capital to fund new vehicles at a time of tightening lending rules and the returning issue of residual values.

We will continue to see market concentration as companies diversify both risk and strategies. A larger fleet in more markets means lower operating cost and risk mitigation at the same time.

What would this mean for fleet operating cost development? The challenge of rising cost will not diminish and, depending on where the fleet is operated, different cost containment strategies should be applied.

In the more stable economies ‘green fleet’ initiatives will increase, particularly in the UK, France, Germany, Scandinavia and Benelux, where market growth, geographical advantages or fiscal incentives boost the introduction of electric vehicles and hybrids.

This will prompt the more holistic approach of ‘total cost of mobility’, whereby all means of transport and technology utilised by the company’s core business will be evaluated to minimise cost and non-necessary emissions.

On a larger European scale (especially in the stagnant and declining markets), fleet managers must have initiatives in place to reduce the carbon footprint of their vehicles, containing cost increases where possible, but meaning a reduced total number of vehicles to reflect these external market pressures.

As monthly rates for vehicles are unlikely to be optimised through tendering or multi-bidding, a lot of leasing companies, fleet managers and consultants are now proposing accident reduction initiatives and coaching sessions to reduce the cost and downtime caused by misfortune.

This usually leads to more eco-friendly driving behaviour that is not only safer but more fuel-efficient. Some estimates of the savings are double-digit percentages, unachievable by regulatory measures and cost control alone.

Jens-Uwe Berg is market development manager of global leasing at JATO Dynamics

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