Leasing vehicles instead of owning them is a decision most fleet operators and businesses must face from time to time. But which…? JOHN LOXTON, WesBank’s head of fleet management/leasing, has some advice…
THE CHOICE CAN be complex; the correct decision not always clear-cut. He warned that trucking routes, seasonality, organisational preferences, type of operation – even the configurations of a fleet – must also be considered.
Each organisation has unique needs so a flexible leasing solution with a variety of options should be investigated and a decision made based on what’s best for the fleet at a particular time.
The cost of finance is usually the largest single cost of owning/operating a fleet – except for long-distance transport for which fuel is by far the largest cost element.
Finance options are few: outright purchase, financial leasing, or an instalment option. ”No matter which option is chosen,” Loxton says, ”these days fleet managers should focus on achieving the lowest cost of ownership.”But how…?
Full-maintenance leasing from a third-party provider beats owning for several reasons: the most important being purchasing power and reliable maintenance and support.
Loxton again: ”This is especially true for larger fleets because of tax benefits and cash flow. A larger fleet may not need the depreciation benefit that comes with financing a loan so will take advantage of leasing’s lower payment options. That allows the monthly lease payment as an expense.
”It also provides for shorter vehicle life-cycles – that allows them to take advantage of the latest technology.”
There’s no ‘one size fits all’ solution, Loxton warns. ”Customers should be able to determine their own terms, finance arrangements, and service delivery method.
”A major benefit of financing a fleet is it that it offers fleet operators a specific, customized, finance structure on terms that match their needs.”
More and more fleet operators, he adds, acknowledge that while they need trucks for a job they don’t need to own them. ”They want productive vehicles and to be able to manage the rising cost of equipment – mainly due to emission rules and to new technology that promise tremendous value.
”That places more emphasis on maintenance and maintenance needs well-trained technicians.”
Loxton explains that progressive companies understand that running a fleet is not a core business – it should be handed to a specialist with buying and procurement experience, one able to help with specifying the correct trucks and equipment and the ability to provide maintenance to maintain uptime.
”At the end of the day, he concludes, ”what is highly beneficial for one company could be a real problem for another.”