Fleet Management

STEERING YOUR WAY THROUGH MOTOR VEHICLE LEASING CONSOLIDATION

ERA Procurement Solutions' director, Martin Wiesenhaan, believes a holistic approach to reviewing motor vehicle leasing costs is the key to a consolidated and accountable corporate policy that delivers long term savings. He therefore not only analyses the leasing situation but also assesses the fuel, maintenance and insurance costs and processes in order to ensure that the entire category benefits.

Martin explains more, “We recently assisted a client whose fast expansion had resulted in their car leasing costs amounting to around $5million for their requirements. They believed there were opportunities for consolidation and so were receptive to ERA’s approach."

“We identified that there were nine suppliers which meant it was hard for the client to monitor the number of actual car leases currently in place and of course there were inconsistencies."

The first step Martin took was to collect, from each of the company’s subsidiaries, the information and analyse how much was being spent on car leasing, which suppliers were being used and what contracts were in place, as well as how many and how relevant the leases were in terms of actual requirement and age of lease.

By standardising the client’s manufacturer – in this case it was General Motors - ERA was able to achieve a further discount on the purchase price for the client and also able to regulate the quote requirements and take advantage of their maintenance program.

Martin also added, “We’ve negotiated with the supplier for further discounts based on the client’s sheer buying power."

Then ERA was able to look at how fuel was purchased and again several fuel card providers were being used. One fuel card was then selected for the entire company to optimise on their buying power and to secure a more beneficial price point.

The final step was to centralise the insurance. “Insurance is often organised through the leasing company but if you arrange a corporate policy further savings can be achieved which is what we managed in this instance," adds Martin.

The savings achieved to date are $75,000 with further impact to be felt as the leasing contracts come up for renewal and are turned over to the new corporate policy arrangement.

Martin concludes, “For the client the greatest long term benefit has been that they now have a streamlined corporate policy in place which is monitored online using the supplier’s centralized management reporting system. This incorporates per individual a driver budget analysis comparing a particular period against the life to date from a budget and expenditure perspective as well as a monthly driver report which incorporates a cost breakdown for the lease, maintenance, repairs and fuel as well as a fuel consumption report and FBT information."

"ERA, as part of its service policy, has handled the implementation to ensure that the client’s expectations are being met."

“It was good to know that at all times ERA was representing our best interests no matter which supplier they were negotiating with and because of this they were able to drive the deal that much harder," says Alan Fonseco, CFO Alesco.

“The major benefit of the project was the cost savings realised, the simplification as well as the standardisation of our processes on a very large motor vehicle fleet."

In all, the ERA team was able to secure annual savings of $600,000 for Alesco.

“These savings, achieved by ERA, far exceeded our expectations," adds Alan Fonseco.