26 Jul 2017 | 08.16 am
How The Fleet Car Sector Is Changing
The view from Hertz Lease and Avis Fleet Solutions
26 Jul 2017 | 08.16 am
Fleet customers now expect fleet management systems so they can monitor their drivers, writes Emily Styles
Change has been de rigueur in the fleet sector over the last few years and there is more to come. So says Michael Hegarty (pictured), General Manager of Hertz Lease Ireland. Hertz Lease Ireland is operated under franchise by Archer Sheridan Leasing Limited, a subsidiary of Sheridan Motor Group, which has been in existence since 1915.
The group took on the Hertz franchise in Ireland in 1985 and now also operates Hertz Lease franchises in the Czech Republic and Slovakia. Hertz Lease Ireland specialises in long-term contract hire and fleet management services – the Hertz car rental franchise is not part of the Sheridan Motor Group.
“Archer Sheridan Leasing was trading in the leasing and contract hire market prior to taking on the Hertz franchise,” Hegarty explains. “What the Hertz name brings to us is a window into the large multinationals that come to Ireland. We work with about 150 clients, some of whom have been with us for more than 25 years. They also range across the board from MNCs to SMEs.”
From his vantage point, Sheridan identified a big change in the fleet sector that began during the recession and continued thereafter. “Companies increasingly decided to offer cash in lieu instead of a company car to employees, particularly for senior executives. That affected the overall market size for leasing and contract hire.
“Companies were glad not to have the cars on their books and have to account for them. They could just give a cash amount and the employee could drive their own vehicle.” However, Hegarty notes that this arrangement, which is known as a ‘grey fleet’, has health and safety implications.
He explains: “Companies tend to think that they’ve outsourced their responsibilities but effectively they haven’t. If they ask an employee to drive from Dublin to Galway in their own vehicle and then pay them an allowance, the requirement under the Health and Safety Act is that they must ensure that the vehicle is fit for purpose. Technically, it’s not the driver that has to ensure this, it’s the company.”
Hegarty also regards with interest the tendency among vehicle manufacturers to offer products such as PCP finance. “It’s like the old hire purchase arrangement,” he says. “When everything is going well and you’ve got equity in the vehicle for the three or four years that you’ve contracted for, you’re fine. But if the guaranteed minimum value is in negative equity then you’re at nothing – you have to hand the vehicle back and start again, finding a deposit.”
Within commercial fleet hire, Hegarty maintains that in recent years a stronger onus has been placed on fleet providers to ensure continuous vehicle safety. This has seen providers invest in IT systems to keep in regular contact with corporate clients and drivers. Notwithstanding the tech innovation, preferences for fleet vehicle models has not changed radically, says Hegarty.
“We have had small numbers of clients looking at electric hybrid vehicles. But traditional models such as the Ford Mondeo and VolkSwagen Passat have remain popular. Fleet preferences now are almost exclusively for diesel-powered cars, thanks to changes in VRT and tax back that were introduced from 2009. I expect that this preference for diesel-run vehicles will be rolled back in the coming years as alternative fuel sources become popular.”
Another fleet provider that has seen big changes in the sector is Avis Fleet Solutions (AFS). For this company, it’s all about the need for high-tech fleet management systems. Such systems may be the difference between winning and losing a tender in the competitive fleet cars sector.
AFS has its origins in the Denis Mahony Motor Group, which was founded in north Dublin in 1963. The family-run business is now one of Ireland’s leading motor groups, with two showrooms and service centres in Dublin as well as its own finance and leasing operations. The group’s leasing division, Denis Mahony Contract Rentals was established in 1966 and was a pioneer of the motor leasing industry in Ireland. It took on the Avis Fleet Solutions licensee in Ireland in 1991.
According to Bobby Doyle, Managing Director of AFS, his fleet solutions are used by around 250 business customers from a range of different industries, among them pharmaceutical, construction and FMCG. “Our primary customers would be SMEs with fleet sizes of less than ten vehicles, but we do have larger corporates in our portfolio with fleet sizes all the way up to 300 vehicles, typically comprising a mix of passenger and commercial vehicles,” he says.
Doyle stresses that having a good fleet management system is part of a bigger trend he has noticed in his sector in recent years. “Since the recession, leasing companies have adapted innovative technologies to ensure that they are more cost efficient and customer centric.”
Changes are also afoot regarding the types of vehicles sought by company drivers. However, the staple car models still feature predominantly for AFS too. “We see hybrid and electric vehicles as having a big future in Ireland but at present the most popular vehicles include the midrange saloons such as the Ford Mondeo, and SUVs such as the Toyota Rav4.”