Despite low interest rates and special deals being offered by importers, fleet management companies are maintaining their core business of finding and managing vehicles which are fit for purpose. John Oxley asked two key players for their comments.

JO: Interest rates and deals from importers are reaching very low levels, sometimes coupled with service plans at low cost. This makes it appear to be an economical option to buy the vehicle outright rather than to lease. What do you think?

Geoff Tipene, managing director sgfleet: “These types of deals are not a concern to us. The customers we deal with require actual fleet management and compliance management. What’s on offer in this example is a vehicle and maintenance plan, and then you’re on your own.”

Lance Manins, managing director Driveline Fleet: “These deals have been generating good interest and good discussion from consumers. Generally speaking if something sounds too good to be true it usually is just that.

“Offering low or 0 percent interest is a wel- known marketing gimmick. When you interrogate the numbers it’s obvious fairly quickly that a low interest rate and little if any discount off the RRP of a vehicle will most probably cost you more in the long run than a decent up-front discount off the purchase price.”

Lance added that these offers are largely restricted to private consumers rather than businesses, and normally only available as a hire purchase option, so they haven’t made much impact on Driveline’s core client base which are SME businesses wanting to maximise the tax advantages of leasing their vehicles.

“We have always had an ‘open book’ approach to leasing,” he said, “ and believe in presenting to our clients the full picture on pricing both in terms of the way a lease or finance agreement is structured and the discounts used.

“We have nothing to hide here, and with an open pricing format clients get to see the true pricing picture and then can make informed decisions. “

JO: At the same time more and more dealers, and dealer groups, are setting up their own fleet departments, sometimes not just to arrange the purchase of vehicles, but often on-going maintenance and basic fleet management. Do you see this as a threat to your business?

Geoff Tipene: “No. The dealers are not set up in a way an experienced FMO is with products, systems and more times than not global support for multi-nationals. The example is fine for the one or two vehicle fleet, but with the larger fleet a bit more expertise is required and expected from the customers.”

Lance Manins: “No it’s not considered to be a significant threat for several reasons; our own extensive research and continuous tracking of our client activity over the years tells us several key things about how people approach car buying.

“First they ‘shop by shape’, that is to say the first decision is usually that they need a specific style of vehicle e.g. small car or ute. Second, consumers including fleet managers want choice.

“That is to say, first comes the decision they need a ute, second comes the desire to see the options across several different makes and models.

“Real choice simply isn’t available by being tied into one dealer franchise. Most dealer groups are very limited in what they can offer in terms of not only a range of vehicles, but also finance products.

“Clients are becoming increasingly tech savvy, which means that they are much more informed when they come to buy. Online research and product comparison is a way of life now, gone are the days when a consumer would walk into a dealership, test drive one car and drive away having paid full retail. Dealerships are still based around an antiquated model that is yet to catch up with consumer needs.
He said Driveline Fleet intended to remain independent so it can offer options on every make and model of vehicle and a full range of leases and finance products too.

“For example we have many clients who need a full spectrum of solutions from leases on executive cars and utes to HPs on older vehicles and finance on plant and equipment,” he said.

“We’ll continue to invest in technology and digital advertising too. Our website is an industry first with lease pricing on over 1,200 vehicles (just about every make and model available in NZ) and we’ll keep on offering a new approach to car leasing where all the details are our in the open.”

JO: Bearing in mind the above, what do you see as the main point of difference between both of the above scenarios, and your business? First, in terms of vehicle choice, and second, in terms of on-going fleet management.

As far as vehicle choice was concerned, Geoff Tipene commented: “An FMO is not restricted to one manufacture. An experienced FMO can give sound advice of ‘fit for purpose’ requirements without any bias towards any particular manufacturer or brand”.

Lance Manins added: “Driveline offers free and unbiased advice on which vehicles will suit our clients’ needs now, and in the long term. Because we have decades of experience in the industry we can easily see through the hype and provide professional independent information and help when choosing vehicles. This experience is invaluable to clients and often makes all the difference years down the track.

“We don’t just help with vehicle choice, but offer a full solution for businesses, everything from vehicle sourcing and negotiating discounts to organising accessories, custom fit outs and even sign-writing. It’s all about making it hassle-free for our clients.”

As far as on-going fleet management was concerned, Geoff Tipene noted: “The fleet management industry is forever pushing the boundaries on new products, digital service delivery and compliance management to name a few.

“I would find it difficult seeing a dealer making the massive investment required in what is not their core product to keep pace with the well-established FMOs”.

Lance Manins echoed these sentiments. “Driveline only represents the true costs of fleet management and servicing, and not a retail package built upfront into a client’s financing which ends up costing them more in the long term,” he said.

“Independence and unbiased views on what is appropriate for each client based on their unique circumstances is highly beneficial to clients.”

Summing up, Geoff Tipene said: “Fleet management, compliance management, whole of life cost, fit for purpose, are just some examples of what companies with ‘tool of trade’ vehicles need to consider.

“At the end of the day a competitive (cheap) rental will get you a vehicle, but will it give you the ongoing fleet and driver management, cost containment, and compliance required in the New Zealand environment of today?”

And from Lance Manins: “Our strengths are the following:

• Saving clients time and money is our core objective.
• Looking at the whole of life cost vs the initial vehicle cost.
• Driveline’s purchasing power will usually outweigh the discounted % rates on offer from the manufacturers and this has been proven time and time again.
• Ability to structure lease and finance packages that primarily suit the client as opposed to the financial targets of the dealership.
• Lower vehicle prices from Driveline also equates to longer term savings in FBT which is often overlooked.
• Independent unbiased advice presenting the entire fleet available in the NZ marketplace and not just one make or model of vehicle.
• Professionally managed fleet management programmes.
• Lease products that are available on new and ex-lease/used vehicles.
• An up front and “open book” approach to leasing with no hidden charges.
• Great service from an experienced team of industry professionals ready to go to work for our clients every day.
• The ability to use technology and the digital space to better inform our business decisions and the future evolution of Driveline.