By Andrew Hodgson, Senior Manager, Lex Autolease.
Change is on the horizon for fleets this year. But with change comes the opportunity for companies to improve efficiency, increase savings, enhance employee offerings, and maximise benefits from suppliers. And in the process, we see the expertise of fleet providers being instrumental in helping organisations develop strategic and highly customised solutions to leverage these opportunities in 2014.
Now is the time to future proof
Although the economy has shown encouraging signs of recovery in the past year, the upturn is likely to be steady rather than spectacular during the next 12 months. However, with proposed taxation and legislative changes set to come into effect, this presents the ideal opportunity for organisations to take stock, examine their policies, and ensure appropriate systems, strategies and products are in place to future-proof their company. This year, we anticipate will work closely with even more clients at a more strategic level, ensuring their fleets are fit for purpose and aligned with the goals of their organisation.
Taxation changes need action
Taxation has always been a key player in bottom-line decision making, but Benefit-in-Kind (BIK) rates could have an impact from April 2015 when tax on cars emitting more than 75g/km is set to increase by two percent to a maximum of 37 percent. The proposed change should encourage companies to review their policies, with efficiency remaining a top priority. Part of that process will involve re-examining the composition of fleets and switching to more sustainable solutions including low-emission, fuel efficient vehicles in lower tax bands.
There will be less fuel for thought
Fuel, of course, will always be a key consideration for fleets. But as manufacturers continue developing cleaner and more cost-efficient products, companies can increasingly look to smarter vehicle choices as a more sustainable way of managing costs in the future. And while the petrol-diesel debate continues into 2014, we see traditional diesel remaining the fuel of choice with over 80 percent of our fleet cars diesel fuelled – and we don’t see that changing anytime soon.
Plug-in alternatives will gain momentum
CO2-emission legislation and government funding will undoubtedly power new developments in electric and plug-in vehicles this year. The government’s pledge to invest tens of millions of pounds in developing infrastructure for electric vehicles shows confidence in its future. And as manufacturers release new models to meet emission, efficiency and cost-saving demands within the marketplace, we are likely to see an increase in uptake.
Traditional funding will lead the way
From a funding point of view, contract hire is likely to remain the preferred choice for large organisations. As a total vehicle management package customised to the needs of the business, it is a highly desirable, manageable and affordable option for the majority of companies. But while some things will stay the same in 2014, we may see continued growth and interest in employee car ownership (ECO) programmes and contract purchase in the coming year.
Employees will stand to benefit
In the past we have seen increased growth and interest in salary sacrifice in response to the rising number of quality low-emission vehicles on offer. With enhanced affordability and accessibility to premium vehicles, we are likely to see even more uptake of these schemes this year. They represent genuine value and provide large organisations across a range of sectors with an opportunity to enhance their reward offering to employees.
Fleet providers will become trusted business partners
As customers face more options and opportunities, we see our role as a strategic business partner becoming increasingly vital. We anticipate working more exclusively with our customers to provide specialist advice and support to develop fleet solutions that work smarter and harder for their business, and ultimately their bottom line. In a tightening labour market, this specialist support will be increasingly important to help ease pressure on mid- and senior-management. As part of that support, we will see greater emphasis on Whole Life Costs, giving organisations an in-depth and true breakdown of running costs for the life of the vehicle. Working with organisations in this capacity will be integral in ensuring they get maximum benefits now and in the future.
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