Dealing with car and van fleets can prove difficult, we should know. But streamlining processes, reducing risks and opting for shorter or more flexible car leases can help.
The word car subscription is being banded around everywhere at the moment, the initial promise of these contracts was flexibility, but take a look at some of the companies out there in the UK and you will need to commit to a 12, 24 or even 36-month contract. What’s the point if the contract isn’t flexible.
Solutions for Businesses
Today, we’re going to take a quick look at the many solutions that are out in the marketplace for business fleets, along with their pro’s and con’s.
Vehicle Subscriptions
We’ve put vehicles, as this covers both car and van subscriptions in the UK, the goal is to take a vehicle on a flexible basis, usually on a 1-month lease, then run the contract on a month-to-month basis until you no longer need it.
Pro’s Include: Flexibility in the contract, so no early termination charges. Maintenance and servicing is usually included in the monthly price, vehicles available very quickly. Able to choose the exact make and model of a car. Plus low initial outlay.
Con’s Include: Costs per month are usually higher than those on traditional leases, cars aren’t always brand new, some charge per 28 days making the headline rate look expensive.
Short-Term Leasing
or Minilease’s as they are called, are contract similar to a traditional 2/3 year contract but over a shorter period of 3, 6, 9 or 12 months. This makes them ideal for covering probation period or model evaluation.
Pro’s Include: No long-term contract, access a number of the latest makes and models, fixed costs for a shorter-period of time, easier to get a credit line than traditional leasing.
Con’s Include: Maintenance is usually optional but not necessary due to the short-term nature. Longer lead-times of 2-3 weeks. Cannot specify the options on the vehicle, cannot be extended or reduced without paying penalties.
Long-Term Car Rental
Long-Term Car Hire from traditional companies such as Avis, Europcar and Hertz are a great way to add a car to your fleet easily, similar to a subscription they serve a purpose for a contract length of between 1-3 months. Specialist companies such as Cocoon or Drive Car Flex could be a cost-effective solution, especially if you have a fleet insurance policy.
Pro’s Include: Get a car the next day in some circumstances. Easy to set-up an account with many of the providers. Vans available. Airport pickup if required. Unlimited mileage on some vehicles.
Con’s Include: Higher costs if you use one of the multi-national firms, cannot specify exact make or model, cars can have multiple miles on the odometer, risks of damage.
Traditional Contract Hire & Leasing
Of course, there is the traditional route of opting for a car or van lease, in this case you would need to commit to a 2, 3 or even 4 year contract. The downside is that if circumstances change or your employee leaves, you’re stuck with trying to reallocate a car or worse, paying an early termination charge.
Pro’s Include: You can specify the exact make, model, colour and options, cheaper than the short-term alternatives, maintenance can be added for fixed cost motoring, no worries on depreciation.
Con’s Include: You can send the car back early without paying an early termination charge, long lead times on some of the manufacturers, return standards, and higher initial outlay.
Outright Purchase
Of course, for cash-rich companies or for those who want to dig into their savings, you can purchase the vehicle. This doesn’t have to be paid in full with cash, you could finance this with a Hire Purchase agreement or even a 0% finance offer. It will be an asset that you own.
Pro’s Include: Sits as an asset, you choose the exact make/model/derivative, you can choose from local or national dealers to help, take advantage of incentives offered.
Con’s include: Can be a pain when disposing of the vehicle, cars tend to depreciate which will be your risk, technology changes quick, higher initial outlay.
Conclusion
Whatever route you choose for your business, you must make it work for you. Before you sign up for a long-term car or commercial vehicle for your fleet, take a look at the short-term solutions to see if this can work. Do plenty of research into the company you are looking at using, look at both the 5-star reviews and the 1-star reviews to see if this might be an issue for you and always read the small print.
The future does seem to point towards using short-term solutions such as vehicle subscriptions and flexible car leases over traditional methods, especially in such uncertain economic times, but it needs to work for you and your business.
Cocoon Vehicles
Cocoon Vehicles was established in 2007 to offer something a bit different. As a family-run company their strength is customer service and value, offering some of the latest makes and models in the market place whether you need something small for a member of staff to something sporty or executive for the CEO.
They also specialise in areas such as Expat Car Leasing for your overseas workers, overseas parent company credit lines and new start-up businesses.
Web: cocoonvehicles.co.uk/business
Tel. 01332 290173