The supply of new company cars is expected to return to pre-pandemic levels by 2024, but ongoing cancellations, delays and inadequate communication are damaging long-term fleet-manufacturer relationships, according to operators.
Fleet and business registrations have realigned with a still-suppressed market. The latest Society of Motor Manufacturers and Traders data shows a 28% (104,433 cars) decline in the first quarter of 2023, compared with the same period of 2019, which is similar to the 31% (102,343 units) drop in private registrations.
A year ago, fleets and businesses registered 49% fewer cars (180,303 units) than they did in 2019, compared with a smaller 31% (103,173 units) decline in private registrations.
Manufacturer support is critical while shortages persist. The Volkswagen Group is working to secure stock for UK fleets, providing updates through its digital portals and offering extended finance and maintenance agreements to plug gaps if deliveries are delayed.
A fleet spokesperson for the car maker told Autocar that semiconductor shortages were expected to continue through 2023, but that a cross-brand, cross-functional strategy would secure long-term supply on a group-wide basis.
Toby Poston, director of corporate affairs at the British Vehicle Rental and Leasing Association, said leasing companies are optimistic about the market recovering this year. Demand for company cars is strong and deliveries are on schedule, but extended lead times are still the norm and vehicles aren’t always arriving in the specification they were ordered in, which affects lease rates.
“Many strong and long-standing relationships have been tested by shortages and unpredictability in the supply chain,” said Poston. “This has been exacerbated by some manufacturers prioritising higher-margin retail customers and introducing direct sales models.
“There is also a lot of interest in new manufacturers coming to the UK market. Motivations are changing and many drivers are softening their brand loyalties if an alternative manufacturer has a vehicle that is able to meet their needs.”
Paul Hollick, chair of the Association of Fleet Professionals, cited similar challenges, with operators reporting a breakdown of communications with some manufacturers’ representatives during a period where oversight of orders is absolutely vital.
He added that disruption offers an opportunity for new manufacturers, such as those from China, to gain a foothold, and the association is working with newcomers to help them understand the needs of corporate fleets.
“OEM service standards are at a record low across the board, [though] there are pockets of stars,” said Hollick. “The biggest issue is they are not telling us what is going on. Fleet managers have very long memories and, when the stock issue abates, they will recognise [the best performers].”
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