27 Jun 22

10 fleet strategies to deal with vehicle supply shortages

Fleet decision makers are having to be agile in their policies and strategies to keep the wheels of their businesses turning in the midst of a new vehicle supply shortage.

1. Contract extensions

With delivery lead times for new vehicles stretching to 12 months and longer, fleets are delaying the remarketing of vehicles that they own and working with leasing suppliers to extend contracts until replacement vehicles become available. Formal contract extensions should cut monthly rentals significantly.

2. Manage maintenance costs

Keeping vehicles for longer periods and higher mileages means fleet managers are having to focus on service, maintenance, repair and tyre costs, controlling expenditure as vehicles get older and less reliable.

3. Let drivers order cars early

Companies are opening their choice lists to company car drivers several months earlier – typically nine months before a vehicle is due for replacement – so orders can be placed as early as possible.

4. Communicate with drivers

Fleet departments are coordinating with HR departments to communicate the delays in supply to company car drivers who are desperate to switch out of diesel and into electric models in order to capitalise on the massive benefit in kind tax savings (depending on national tax rules).

5. Expand company car choice lists

Company car choice lists are becoming more flexible, with employers offering drivers a wider choice of manufacturers in a bid to work with suppliers that have shorter lead times. Shrinking discounts and rebates, as demand for new vehicles outstrips supply, means a wider spread of suppliers is no longer necessarily more expensive than channelling procurement through a limited number of OEMs.

6. Be flexible about vehicle specification

Fleets and drivers are also having to be more flexible about the specification they expect on their new vehicles as the semiconductor shortage forces manufacturers to remove certain standard options in a bid to keep their production lines moving.

7. Keep hold of end-of-contract vehicles

Larger fleets are deciding to keep hold of end-of-contract vehicles, even when new replacements arrive, rather than sell them or return them to the leasing company. These older vehicles are then used as pool cars and vans to provide cover for fleet vehicles that are off the road for maintenance and repair, or to provide mobility for new recruits until a permanent vehicle becomes available.

8. Don't write off crashed vehicles

Fleets are challenging insurers’ decisions to write off, rather than repair, crash-damaged vehicles. With a shortage of replacement body panels and mechanical components, insurers claim that a growing number of repairs are uneconomical, but for fleets that urgently need vehicles, waiting a month or two for a repair makes much more sense than waiting 12 months for a new vehicle.

9. Plan for peak periods

Forward-looking fleets are already informing the rest of their businesses about the shortage of vehicles and how this might impact high seasonal demand, such as pre-Christmas deliveries. Planning ahead means companies can book short term hire vehicles early, or even change the type and size of vehicle they use, in order to keep staff and cargoes mobile in peak periods.

10. Forecast future demand

Fleet operators are having to become business forecasters, placing orders for vehicles that may not be delivered for 18 months. Ordering vehicles over this timeframe involves anticipating demand – how big will the business be, how many and what type of vehicles will it need? Playing safe by simply placing orders to replace vehicles like-for-like may restrict the growth of a business.

NOW READ: How leasing companies are helping customers deal with supply shortages.


Authored by: Jonathan Manning