VAN Fleet World's inaugural LCV Round Table asked a panel of experts from van manufacturing, rental, telematic suppliers, auctions and residual value specialists, what they think the future could add to that list. Dan Gilkes reports.
The LCV Panel
AA – Alan Able, Isuzu UK
DW – Duncan Ward, British Car Auctions
MF – Matthew Freeman, CAP
GA – George Alexander, Glass’s Information Services
TG – Tony Grove, Arval
DP – David Petts, Ford Great Britain
DA – Dave Adderley, Burnt Tree Vehicle Rental and the BVRLA
AW – Andy Walters, Quartix
SM – Scott Michael, Citroën UK
JS – Jeremy Smith, Citroën UK
As the move from Euro 5 to Euro 6 engine technology approaches with the adoption by most manufacturers of selective catalytic reduction (SCR), how will van fleets cope when dealing with exhaust additives such as AdBlue?
DP: ‘It is mainly problem of communication. We are already seeing it with minibus builders who have to meet Euro 6 this year. How do they communicate the changes in operating to people like teachers, who are using their minibuses?’
TG: ‘While some might think that AdBlue will be a service item, that’s not necessarily going to be the case. Some vehicles won’t see a dealership potentially for up to two years, so there will be a requirement to top up AdBlue tanks.’
DA: ‘As customers, we still don’t know exactly what all of the manufacturers are going to do in relation to Euro 6. It really will be about communication.’
DW: ‘This isn’t just about the first customer either. On the used market a van can go on to have another two or three owners. Euro 6 will have an effect on used values, as buyers will want to stay with Euro 5.’
DP: ‘Certainly it is the owner in 5-6 years time that will be the one with issues.’
Some fleets have experienced problems with DPF regeneration in urban operation. Could we see a return to petrol engines in vans, increased interest in LPG/CNG gas, or finally a move towards electric vans?
TG: ‘We have found that it is much less of a one-size-fits-all solution for our customers these days. We have to look at individual driver use and find the right van for each operation.
‘However for an electric van you have to be depot-based, not home-based. A lot of our customers have to go in and out of London and generally speaking they are home-based outside of London, so range and recharging become a problem.’
GA: ‘You also can’t have multiple drivers for an electric vehicle.’
DA: ‘The fleet concern with alternative fuels and technologies is what if it goes wrong. We are all expecting that battery technology will improve very quickly, but until that happens we don’t see the demand.’
DW: ‘I have to say, the used market for an electric van is simply non-existent.’
JS: ‘I still believe that, at present, driver education is a cheaper means to improved fuel savings.’
Once the vehicle purchasing choice has been made, the three main factors of operating cost are the driver, fuel and residual values. How can fleet managers improve their resale values and cut whole-life operating cost?
DW: ‘I think this is going to be a bigger challenge going forwards. Operators are enjoying very high prices at auction at the moment, due to low supply of good used vehicles. Even in these market conditions the highest prices are still being achieved by clean vehicles, though recently that seems to have gone off the agenda as prices are so high.
‘The difference can be as much as £1,500 on a £5,000 van. There are some fleets that really take it seriously, but there’s just not enough of it going on.’
AW: ‘The good fleet manager knows who the good and bad drivers are. Telematics give them the statistics that they require to really look at drivers. The driver who is using more fuel is often the one who gets through brakes and suspension components too.’
DW: ‘It’s true, those vans that have been equipped with speed limiters are usually going to be a good van on the used market.’
TG: ‘There are a number of issues however, there is a trend towards procurement and HR people having to run the fleets with little or no experience. Also, 95% of the people who drive our vans wouldn’t call themselves van drivers.
‘We recommend that customers put in a regime of inspecting a van every month. We also have some companies who work on team peer pressure to improve driving standards, with driver incentives. Putting reverse sensors on a van also pays you back very quickly.’
DA: ‘It’s also about the quality of repairs that get done and how quickly they are carried out. None of us wants to hit customers with end-of-term charges.’
DW: ‘While condition is vital, specification is also an important factor in residual value. Manufacturers and first owners are blinkered into thinking that there will only be one user of the van, but there will be two or three.
‘Air conditioning will make a van more attractive and some colours sell better than others.
‘Big fleets all buy the minimum specification, cheapest van, but that’s no good to the second user. The best working environment will usually give the best residual.’
TG: ‘That’s true, comfort specification is a yes, but alloy wheels remain a big no for fleets, as they are too easily damaged.’
As the UK economy continues to recover, we are told that the banks are once again interested in financing vehicles, though manufacturer-owned finance organisations have grabbed a large slice of the market. Is vanpurchase getting easier, or are there alternatives that businesses should be investigating?
TG: ‘It’s not about low interest rates, but the unwillingness of the banks to lend to small businesses. It is still very difficult for SMEs to find finance from banks.
‘Our van fleet has rapidly outgrown cars over the last couple of years.’
DA: ‘We’re certainly seeing growth in all types of rental at the moment.’
SM: ‘We’ve also seen a real move from SMEs where they don’t have to commit for as long. Four-year deals are being replaced by two-year contracts. We’ve also seen a move into contracts for converted products too, tippers and minibuses.’
DP: ‘We encourage our dealers to put monthly and even weekly payment terms on the side of the van now.’
TG: ‘Government out sourcing has seen a lot of companies growing up in that sector and they look at contract hire as a natural way to finance their fleet.’
JS: ‘Customers should be careful though and look closely at what they are buying. Cheap deals on the internet aren’t always what they seem.’
We have seen massive growth in telematic systems, both in the number of companies offering the service and in the amount of data that can be supplied. How have telematics made the fleet managers life easier and will “connected” vans add to that?
AW: ‘Growth has been very strong for us, up 60% last year, with fleets up 20%. That growth is predominantly from LCV fleets. Around 29-30% of LCVs in the UK operate with some form of telematics. That figure is much lower in Continental Europe. I think we have reached the point in this country where van drivers expect to have telematics in the vehicle.’
SM: ‘As a manufacturer that offers a telematic system as standard in many vans, the number of fleets asking us what else the black box can do has gone up exponentially. The number of fleets taking our fleet management system has grown massively, but not in the area we thought. We expected it to be adopted by big fleets, but it has been the 15-50 vehicle SMEs that are seeing the benefit.
‘That said, we get a lot of customers saying that telematics are great, but they don’t know what to do with all of the information.’
AW: ‘It is very much a question of tailoring reports. For SMEs it is about money in their pocket and faster decision-making. You’re always going to get the best out of a driver if every time they come into the office they can see on a screen their performance.’
DA: ‘One of the barriers that we see to telematics is that there is too much choice and a lot of it is bad.’
JS: ‘That is true. What needs to come is a standardised set of reports from any black box, to make life easier for the fleet manager with a mixed fleet.’
AW: ‘We are working towards that. Around 70-80% of our R&D spend now has nothing to do with the black box itself.’