Fleet lease contracts and warranties on cars and vans should be lengthened to align with the new ‘real-world’ replacement cycles post-pandemic, FleetCheck is advising.
The fleet management software specialist said cars across its user base are now generally being operated for close to five years compared to 3-4 previously, while vans have moved from around 5-6 years, to up to 7-8.
Peter Golding, managing director, said the post-Covid shortages had forced most fleets to operate vehicles for much longer than originally planned, showing that longer cycles can be safely and economically achieved when properly managed.
‘If you add to this the higher initial prices and uncertain residual values of electric vehicles pushing up costs, then there is considerable overall impetus to lengthen replacement cycles permanently, and this is something that we are starting to see happen on a formal basis with many companies now leasing for longer periods as a matter of course.”
The main issue with such a move is the change to service, maintenance and repair (SMR) arrangements – and Golding said there was “a strong argument” that longer manufacturer warranties should form part of this move.
“While modern cars and vans tolerate age and mileage much, much better than in the past, they do inevitably need higher levels of maintenance over time, especially when it comes to the kind of unexpected breakdowns that cause the most disruption.
“What we feel really needs to happen now is for manufacturer warranties to align to these new cycles. Obviously, some do offer warranties ranging from 5-7 years but there are several major fleet car and van makers who only provide three and, to our mind, this is inadequate for modern fleets and the lengths of time for which they now operate vehicles.”
Extended warranties would also likely mean manufacturers would keep SMR within franchise dealer networks for longer – “so this is something that potentially makes sense for all,” Golding added.
He also noted human resources considerations around longer replacement cycles, but said anecdotal evidence showed objections from drivers were limited.
“To some extent, this is sector-dependent but in many industries, most car drivers are accepting five-year replacement cycles. Modern vehicles don’t just last for longer mechanically and electrically, but they are also better cosmetically over time. Employees are content to keep a car for longer if it stays looking good.”
