How can large fleets guarantee lease pricing fairness?

ALD Automotive’s takeover of LeasePlan has removed a leading multi-national competitor from an already limited pool of potential suppliers, intensifying the need for large fleets to verify that their supply contracts are competitive. This major market consolidation has taken place against a backdrop of new car price inflation, higher interest rates and residual value uncertainty, which have pushed up leasing rentals by 18% in the last 18 months.

Only by restoring competitive pressures to supply agreements and forensically managing the metrics of procurement arrangements can companies re-establish control of their fleet costs.

This requires punctual and recurrent price verification, alongside checking the details of every new order placed. Both of these tasks are complex activities for time-pressed fleet decision makers.

•          Firstly, leasing companies are adopting widely different positions on their residual value forecasts for electric and combustion vehicles, making it hard to find a systematic approach. In many instances, overly cautious residual value projections are leading to lease rentals for exactly the same car varying by as much as 100 to 200 euros per month.

•          Secondly, leasing companies have proved highly adept at passing on recent inflationary costs to customers, despite procurement matrices designed to protect fleets.

•          And finally, leasing companies are trying to divert attention away from soaring lease rentals by encouraging fleets to focus on TCO, and particularly the cheaper running costs of electric cars compared to petrol and diesel equivalents. The truth, however, is that the TCO of all cars is rising as fuel and electricity costs increase.

So, let’s take a look into the solutions available.

• Competitive pricing depends on multiple suppliers bidding for a fleet’s business, so Fleet Logistics works with a broad basket of leasing companies across its customer portfolio, including large scale ‘local heroes’, to control pricing trends for its clients and ensure fleets always receive the best value when they place an order. This removes the sourcing burden from fleet and procurement teams both to verify price integrity and to shop around each time they require a new vehicle.

• Fleet decision makers benefit from the added reassurance that Fleet Logistics has the systems and reporting capabilities to deliver coherent management information, even when vehicles are leased from different suppliers.

• Fleet Logistics can, technically speaking, ‘police’ the terms and conditions of leasing frameworks to ensure rentals remain within pre-negotiated zones, whether in sole-supply or multi-supply arrangements. Interest rates should be linked to ECB rates, management fees, maintenance, and insurance costs must be pegged to pre-agreed pricing structures, and residual value forecasts have to remain within a reasonable contracted range.

• Fleet Logistics builds buffers into all of these price components to ensure a fair and balanced relationship with suppliers. This transparency is key to securing long-term partnerships between fleets and their leasing companies. 

• Working independently at the intersection between more than 150 international companies and their fleet suppliers, Fleet Logistics has a unique perspective from which to assess the market. Its clients automatically benefit from this unrivalled position when analysing lease price tracking trends and data with their dedicated senior International Key Account Managers.

By combining market insight and sophisticated tools with the ability to source best on-the-day prices, and underpinning the entire process with professional reporting, Fleet Logistics can provide fleets with a simple and transparent control solution, removing the burden of managing overly complex cost structures.

With relentless upward pressure on lease rentals, exacerbated by stubborn inflationary pressures in European economies, uncertainty in BEV/ICE pricing, and consolidation at the top of the continent’s vehicle leasing sector, fleets must continuously monitor the control matrices in their supply contracts to ensure they achieve best value from every new order.