By Grant Andrews, Uniqco Managing Director and IPWEA fleet expert
The light vehicle market continues to change, but not at the rapid pace experienced at the time of rising fuel prices and the earlier phases of the global financial crisis.
- The big question in every fleet manager’s mind is how long can Australia sustain a car industry that relies on government hand-outs to survive? Australia currently produces 0.3 per cent on average of the world’s car production. If Australia follows the trend of all the major car manufacturers, we may soon see our advanced motor vehicle engineering expertise, electronic hardware and software development come to the fore and expand our manufacturing of components for cars (as we do already), and export these in huge quantities to facilities all over the world – where the cost of labour is low enough that they can assemble the complete vehicle at low cost.
- Commercial companies are holding six-cylinder cars until 160,000 km as this reduces the impact of depreciation.
- Extended warranties, low service costs on known brands and low initial purchase price on new manufacturers from Korea and China are enticing more people to buy new cars which reduces the value of the used-car fleet.
- Six- and eight-cylinder cars will continue to devalue but the resale value of four-cylinder cars will remain stable for the foreseeable future.
- Pricing of cars sold in Australia is tied to the US dollar and any rise in the value of the US dollar compared to the AU dollar will see our car prices increase.
What do the above observations mean for fleet providers?
Because of public perception regarding fuel economy, four-cylinder vehicles will continue to hold higher resale values compared to six-cylinder vehicles. The more four-cylinder vehicles in the fleet, the lower the fleet costs should be.
Medium sized four-cylinder vehicles are becoming more acceptable as people’s perception of the need for a large car is challenged.
Medium cars often have excellent legroom and reasonable luggage capacity. By moving the majority of the fleet to medium-sized cars, fleet managers can reduce overall costs by as much as $3000 per car per year. Many organisations have already implemented a largely four-cylinder vehicle fleet.