Moving cars by the hundreds

No one knows how to spot a smart buy better than the people who run the car and vehicle fleets on behalf of some of the country…

No one knows how to spot a smart buy better than the people who run the car and vehicle fleets on behalf of some of the country's biggest companies.

It's their business to keep employees on the road in the safest, most reliable and most economical cars they can find from among the hundreds of models with which manufacturers and distributors court them every year.

But fleet managers, who buy cars in their hundreds, are interested only in certain bottom lines.

How reliable is the car? How many days is it likely to be off the road? How much is the cost of ownership? What level specification does it have? Does it have appropriate safety equipment?

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No amount of smooth power-point presentations from salesmen is going to move them from their fundamental criteria.

"Down time is a dirty term in our business. Having vehicles off the road costs a lot of money and we are always looking for ways to reduce it," says Pat Loughlin of Eircom, whose fleet of 4,000 commercial vehicles and 600 cars is by far the biggest in the State.

Eircom buys its commercial vehicles but leases its cars. "We run the commercials into the ground but not the cars. And, besides, the commercials have to be fitted out in a certain way so they are not much use to anyone else afterwards. We have mostly sales people driving the cars and they need something a bit more presentable."

For Pat Loughlin, the formula for choosing cars or vans is a relatively straightforward one.

"We are looking mainly at price and getting the vehicle at the right one, but only with appropriate specifications. Some companies will offer a car at an attractive price for the base model, for instance.

"But then we get down to adding up the costs of the extras that we require and we see the price is no longer that attractive. Safety is a very big issue for us now, and we want things like a minimum of two airbags. Many companies are not offering enough standardisation of equipment, especially in safety terms," he says.

Fuel economy, running costs and the terms of the warranty all come into the frame. "We know from experience which cars give trouble and are not reliable. Cost of ownership is a huge consideration for us, and if we can buy cars with 18,000 service intervals we are happy to pay a little more for our oil and filters."

He has even gone into the increasing cost of servicing cars in Dublin because of heavy traffic. "I have to consider how often a car is going to the garage, how long it takes to get it there and back and how long it is out of service for us. In Dublin that can be a very long time."

AIB's fleet manager, Kieran Barker, sums up the general collective requirement for the 1,000 vehicles the bank runs: "We want a good mix of cars that are reliable and economical to run," he says.

For AIB and other companies with big fleets the buzz word is now "out-sourcing". In fact, the entire fleet is managed by Barker and one part-time worker. All maintenance work goes to outside companies. Eircom has 300 servicing outlets to chose from around the country.

Barker is also head of sales for Allied Arval PHH, a joint enterprise between AIB and a subsidiary of BNP Paris Bas. This company provides a full range of services to other companies running fleets. "They pay us a fee and we do everything else, from purchasing cars, fuelling them, financing them and maintaining them to eventually disposing of them. We will guide them on things such as whether petrol or diesel is better for their requirements."

Depreciation is a big issue in the fleet business. When "user-chooser" deals were offered by companies to staff - in an attempt to hold on to them in many cases - staff simply had a price limit and could chose any car under that limit.

Now companies are rowing back from this kind of incentive. Canny fleet managers saw the high running costs and relatively high depreciation of popular cars like the Alfa Romeo 156 and looked more to companies with better residuals.

Fleet managers drive a hard bargain, according to corporate fleet sales executive with Toyota, Kevin O'Reilly.

"It's an extremely competitive business. These people are scrutinising warranties, reliability trends, fuel consumption and residual values constantly.

"Part of my presentation to them will include details, such as an estimate of how much fuel the car will use over the three-year lease period and how much that fuel will cost. How much discount they can get is also a big issue for them."

There was a time when fleet managers had to be able to guess how long a clutch would last in a particular car or how many sets of brake pads it might need in a busy year. Now they have an increasingly more reliable and technologically advanced range to choose from. But they still pay attention to the small details that cost money.

"We would never advise a company to allow the use of low profile tyres, for instance. Given the potholes in this country they will end up paying €300 to replace a tyre, when a conventional one would cost a great deal less.

"They would probably end up paying for a new alloy as well. And we even know the real cost of replacing a clutch for instance. We know exactly how many hours it should take - we have access to all kinds of figures. AIB pays its bills but it also knows what exactly that bill should involve," says Barker.