The economy may be showing signs of recovery, but when it comes to buying new vans there’s evidence that businesses still have concerns about financial stability, according to Neil Burroughs.
Recent research conducted by financial services provider LDF found that one in three vans on UK roads is at least 10 years old. The company cited economic uncertainty as one of the key reasons why many businesses are choosing to keep hold of ageing vehicles.
However, sticking with your old van fleet could actually be putting your business in a dangerous financial position.
The older the van, the more likely it is that it will breakdown and, as a result, require expensive maintenance and repairs. While a vehicle is out of action, there is also the potential loss of earnings to consider. By using newer vehicles all these problems become less frequent, saving your business money in the long run.
Furthermore, choosing a supplier that can offer you new vehicles, with an all-inclusive package that includes servicing maintenance and replacement vehicles, will enable you to budget more accurately.
The issue of fuel efficiency is never far from the news headlines. Manufacturers are all too aware of this uncertainty and therefore compete to produce vehicles that are as cheap to run as possible. With this in mind, it is clear that the newer a van is, the lower the fuel consumption and the cheaper it will be to run.
It is not uncommon for vans to fail their MOT on emissions, and this becomes more likely the older a vehicle is. However, new vehicles are being built to high environmental standards, avoiding this issue altogether.
Indeed, Euro 6 emissions standards, introduced in September 2015, with the overall aim of making vehicles cleaner, means that cars and vans manufactured after this date will have lower levels of emissions, ultimately leading to better fuel economy.
Another key downside associated with using older vehicles is the issue of brand image. Research by Vanarama revealed two-thirds of consumers say the condition of a tradesman’s vehicle would influence their decision to use them.
Imagine one of your employees meeting with a customer in a brand new vehicle versus turning up in an old, rusty van; maintaining a standard, uniform image across the board with a fleet of shiny new vehicles is a simple way of managing the way in which your brand is perceived.
Van breakdowns and increased carbon emissions can affect how customers view a brand too.
If a van breaks down and your driver misses an appointment with a customer as a result, your business reputation could be seriously damaged. Meanwhile, driving older vehicles could harm a company’s standing amongst more eco-savvy customers who care about the levels of pollutants that old vehicles emit.
There are various options available to businesses, including purchase, contract hire or lease. Each holds its own set of benefits and business operations, financial circumstances and personal views will influence the selection process. However, there is a fourth, relatively unknown option, that businesses don’t exploit enough - long-term rental.
Long-term rental means you won’t have the large cost outlay that you would with buying, contract hire or leasing, so you will have extra cash to invest elsewhere in the business. You will also benefit from a package of extras that includes servicing maintenance, tax and MOTs. Weekly rates are transparent with no hidden costs such as excess mileage penalties and early termination fees.
Another key benefit of using rental vehicles is that when they reach certain age or mileage they are replaced with a new one, meaning your business is constantly operating a young and efficient fleet. This is good for the balance sheet, too, and a big tick in the box when it comes to duty of care and driver safety considerations.
So, if your old fleet of vans is starting to look a little worse for wear and is costing you money, ditching them does make business sense, but only if you make the right decisions around vehicle acquisition.
It is vital you understand the whole-life costs associated with vehicles, because making the wrong decision can be damaging to your business.
Neil Burroughs is head of regional sales at Northgate Vehicle Hire