Covid-19 is creating cashflow concerns for many businesses, and ‘Cash Is King’ in the present climate. This creates an environment of uncertainty for business owners, making it difficult to plan for the future with any real clarity, also creating anxiety and hesitation when it comes to entering into new long term commitments. This means we are all looking at whatever savings we can make in all areas of business.
We Must Keep Motoring
No matter what happens, we still need to get from A to B, and so even with uncertainty and added anxiety we must keep motoring along. We need to look forward, ensuring the future planning of our business motor vehicles enables our staff, and our business centres to be fully mobile.
One primary fleet management question clients are currently struggling with, is the catch-22 situation of knowing vehicles need to be upgraded, but being hesitant due to the potential implications of signing up for long term finance obligations – particularly during these uncertain times. Adding to this complication is existing lease contracts coming to an end, and how renewals will be managed.
Keeping Control Of Expenses
Keeping control of expenses is the key in uncertain times, along with maintaining cash reserves. The potential of late model second hand vehicles as an option over a higher cost new vehicles, most certainly has merit worth considering.
I recently ran the numbers for a client who needed a ute for a new junior employee, and the results may surprise you.
We looked at some assumptions over four years on a new Ford Ranger XL 4×4 D/Cab ute versus a 3 old version of the same vehicle with 90,000kms on the clock :
Total lease payment savings annually for the Ex Lease $2,640.00
Total FBT savings annually for the Ex Lease $2,402.00
Total savings over four years $20,168.00
Checkout the full breakdown on how I calculated this in the video below.
Additional Benefits ?
The additional benefits that the client hadn’t considered with a second hand ute were the environmental, and staff impacts which were;
- Supplying the junior employee with a brand-new vehicle meant setting a potential precedent with the rest of his employees – who benefited from a company supplied vehicle, and looking at a second hand alternative avoided that quite nicely.
- The vehicle would be used in some reasonably harsh environmental conditions on construction sites etc – and a second hand vehicle once again softened the potential for refurbishment risks.
Delivery Delays On New Vehicles
Couple all of this with some pretty average delivery delays on new vehicles being experienced by most of the major manufacturers at present and the option of 2nd hand and Ex Lease is looking like a pretty good business decision all round which reflects in the near 40% increase in volume we are currently experiencing
Check out current availability either on Trademe or on our Ex Lease site.
Driveline has an expert team of consultants that are working with these types of issues daily with clients so if you would like some obligation free advice then give the team a call on 0800 275374, www.driveline.co.nz
