September 11, 2020
The Coronavirus pandemic and subsequent lockdowns has had an effect on every aspect of our lives across every industry and the leasing sector and fleet management industry were no exception.
Simon Naylor, director at Wessex Fleet, said: “Initially many small and medium enterprises (SMEs) feared the worst during lockdown. Fleet considerations were often at the back of their minds as cash flow became the focus. As the situation developed over the summer, each sector and business started to gain an understanding of the implications of the pandemic on their operations, and as the global picture evolved, businesses were able to forecast where they were likely to be in short to medium term.
“Of course, many of these evaluation processes are still ongoing and the situation is fluid. Businesses have to be flexible, adaptable and innovative in order to continue to deliver for their customers.
“During April and May, across the SME sector, the initial uncertainty manifested itself in a wave of company car cancellations as businesses reviewed what they were likely to need, with restructuring meaning job losses, and so car availability. Non-essential orders were put on hold at the very least and some company cars were foregone in lieu of cash payments.
“However, as we move to the tail end of quarter three and into quarter four, there is an understanding that the world will go on. Fleets will not stop moving. They may evolve, but mobility will still be a requirement.
“The SME sector is nothing if not resilient. If the company car perk is being questioned at the minute, there is increasing demand for commercial vehicles, electric cars and plug in electric vehicles. I expect that private leases will likely replace company cars. Cash is king after all.
“I think that in the coming months we will see Grey Fleet Management become increasingly important. The same motivations to get their product to the market have not changed, nor has the attraction of zero BIK for low emission vehicles and employees still need to move, as business journeys will still be a requirement.
“Covid has just brought every fleet cost into sharper focus, but the SME sector continues to innovate. Customers who have been able to rely on professional fleet management have benefitted from it during the difficult times. Built in flexibility, specific, bespoke plans for each business have led to substantial savings. Mileage amendments due to reduced travel during lockdown will be very high on the list of priorities. Utilisation focus, telematics support and obviously costs savings will drive many fleets to review policy. Wessex have strengthened many partnerships during the pandemic by promoting flexible management programmes that offer value, while allowing staff to focus on core activities. Outsourcing fleet to a professional operation is vital to SMEs.
“We may see that Covid acts as an accelerant to the drive towards low emissions vehicles, where the tax, CO2 and fuel savings are clearly attractive. As we all look to travel less, range anxiety from EVs will be less important, and with advances in the range of electric vehicles this will continue to reduce. I am confident that well integrated electric vehicles will produce huge benefits for many corporate fleets.
“What was true pre-Covid is still true now - a professional, flexible, fleet policy is key to many SMEs being able to focus on what they do best. It has never been so important to focus on what’s important to your business.”
Simon isn’t the only one to think that SME’s will be adapting their fleet policies based on the impact of Covid-19. According to the 2020 Arval Mobility Observatory Barometer more SMEs are looking to leasing to fund their company car fleet. Almost a third of UK companies surveyed with 10-99 employees are planning to implement or use more operational leasing in the next three years compared to just 8% when asked last year.
At Wessex Fleet we have been helping our current clients with a range of amendments to their current leases due to the pandemic, including:
- Amending a vehicle’s mileage allowance
- Extending an existing lease rather than opting for a new vehicle
- Terminating the lease early and arranging for the vehicle to be collected
- Delaying servicing and maintenance work then rescheduling this for after the lockdown
- Rescheduling MOTs around the extension (Please note this only applied to MOTs due between the 1st of April and the 31st of July)
If you are a Wessex Fleet client and need any help making any changes to one of your current leases or want to discuss updating your fleet management policy then please give us a call on 01722 322 888.
Although the UK is now reopening and most fleet management services are up and running again there has been a knock-on effect from Covid-19. For example, a lot of our current funders are still running on a longer lead time for collection of lease vehicles, so if you have a lease due to be returned shortly we advise to get in touch with us sooner rather than later.
The car industry as a whole has also been hit by delays due to factory closures from lockdowns around the world. For new vehicle orders, unless you opt for a stock model, you are likely to see a longer lead time than would have been in place pre-lockdown.