Replacement cycles have been a hot topic for the past year, just as they are during every economic downturn.

Back in the early 1990s recession, many fleets increased cycles from two years to three or from three to three-and-a-half. Afterwards, few reverted back to their former schedules.

Now, many contract hire fleets have moved from three to four years; some outright purchase fleets have gone further, to five years.

Some of this has been driven by the leasing companies due to the residual values issues of late last year, some has been driven by the fleets which say it is saving them money.

But in almost every case, fleets and leasing companies have taken a blanket approach to replacement cycles.

One policy covering all cars; one policy covering all vans. There is a more analytical approach, however. Replacement cycles for each individual model, based on optimum wholelife cost.

Why should a Ford Mondeo be on the same replacement cycle as a BMW 3 Series, for instance? If everything about the cars is different – pricing, emissions, residual values, SMR costs, fuel efficiency, and not forgetting annual mileage – surely the length of lease contract should be different, too?

There will be an optimum length of time for a fleet to keep the car or van that will result in the lowest possible lease, or the lowest overhead in the case of outright purchase fleets.

The level of complexity in running a fleet of 100 cars with up to 100 different replacement cycles is immense compared to a one-size-fits-all policy.

But contract hire companies should be able to provide this level of detail.

Outright purchase fleets will have to do the wholelife cost calculations themselves to find out the optimum replacement cycle for each model – software suppliers should be able to create appropriate programmes.

Once that policy is in place, what about the ultimate flexibility of on-going model assessments?

If residuals for a particular model suddenly take a hit or legislation comes in which affects cars on longer term contracts, a flexible cycle policy would enable the fleet to make changes before the contract terms ends.

There has already some of this to a degree: some leasing firms have taken a sympathetic view to fleets that have needed to return or cancel cars due to redundancies.

Having a flexible policy on replacement cycles will help both fleets and leasing companies to keep costs down.