Fleet management firms must 'outsource to survive'

4 October 2000
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05 October 2000 | Cathy Hayward

Outsourcing basic vehicle management services, such as breakdown services, repairs and crash assessments, will be the only way for fleet management firms to survive in today's market, according to a report from Nottingham Business School.

Peter Cooke, head of the Centre for Automotive Industries Management and the report's author, claimed that vehicle leasing firms are having to find new ways to run their businesses.

Several factors are making vehicle leasing firms rethink their traditional fleet packages, he said. These included the new Transport Act, which supports an aggressive tax regime to prevent traffic growth, firms providing cash-or-car options, staff working from home or using company cars on a daily basis and integrated public transport.

"Outsourcing allows the fleet management company to concentrate on its core competency - customer relations," Cooke said. Smaller fleet management firms that outsource vehicle leasing to a larger fleet management firm can take advantage of its superior purchasing power.

Cooke acknowledged that outsourced areas would be likely to generate less profit for the vehicle leasing company, but claimed the companies could increase profits by moving up the supply chain. He added that leasing firms would take over more of the day-to-day fire-fighting issues, such as breakdowns, maintenance and crash repairs.

John Britcliffe, managing director of Overdrive, which specialises in outsourced management of vehicles, agreed that outsourcing is necessary for survival. "It creates a level playing field for all companies," he said.

Debis car fleet management operations director John Lewis said that without outsourcing he could not have access to specialist maintenance staff for his mixed fleet of 4,500 vehicles.

Some firms fail to tell their clients that they outsource, said Cooke. But Derek Wright, managing director of car leasing firm TC Harrison Business Link, said many clients recognised its benefits.

SMoct2000

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