Maintenance contracts as part of your lease: hassle-free, straightforward and cost-effective.

Perhaps, but as with any product offered by fleet service companies, there is an inherent profit margin built in which the fleet manager has to pay, in this case as part of the monthly lease.

And with servicing, maintenance and repair costing between £1,000 and £2,000 for a core fleet over three-years/60,000-miles, the temptation is there for a fleet manager to do it themselves and save money.

But there are plenty of reasons why the vast majority of fleets (around 90%) choose to let their leasing company deal with SMR.

John Lewis, chief executive of the BVRLA, said: “Leasing companies use economies of scale to strike the best value deal with repairers.

"These contracts enable fleet managers to fix their maintenance costs for a period and hedge against any unforeseen events or inflationary rises in maintenance charges.

“For many companies, a central contract will lead to a big reduction in the administrative costs and time associated with processing maintenance-related purchase orders and invoices.”

Acfo chairman Julie Jenner said: “Some form of maintenance contract as part of the lease makes the most sense – either full maintenance, where you pay a monthly sum based on the likely cost of keeping that car on the road over the term, or where you commit to paying for the maintenance only when it is needed and gambling that you can save money through lesser costs.

“Fleets that go it alone are rare and as they generally use leasing to cut down on administration and aggregate costs, it doesn’t make sense to source their own maintenance.

“If you have a background in the motor trade, you might identify ways you can save money but, as cars get more complex, you could be letting yourself in for a lot of extra work and cost.”

Fleet managers like Dave Bamber at iiGroup and Leigh Stiff at Hannaford are the exceptions, having either worked in the motor industry (Bamber) or simply having a love of cars and car modifying (Stiff).

Both have de-bundled the SMR element and are claiming significant savings – but both concede that it has only been possible because they have a full-time focus on the fleet operation.

“If we control the servicing ourselves, we can do it cheaper,” Bamber says.

He uses Alphabet for vehicle supply and Plan GB for aftersales. Instead of paying a fixed monthly fee – “effectively paying up front for maintenance which gives the supplier a bigger profit margin” – he now pays on invoice.

Bamber expects to save up to 30% on SMR while also improving cashflow.

Educating staff can beat the leasing averages

Fleet managers could certainly look to organise their service, maintenance and repair themselves, but it can be difficult to leverage the kind of savings that leasing companies have.

One instance where it could happen is when a fleet is based in one geographical location – perhaps you could negotiate with local suppliers and get good discounts on elements such as labour rates.

But once the fleet starts to get spread around, the number of suppliers will have to increase and the buying power becomes more thinly spread and, therefore, less effective.

If you aren’t careful, you will end up paying retail prices for labour rates and parts, and the whole operation will prove more costly than just outsourcing to the leasing company.

Many manufacturers insist on OEM (original equipment manufacturers) parts being used, and generally the prices paid don’t vary a great deal.

The price of maintenance in a lease includes all the usual elements, such as regular servicing and parts, and parts that may or may not wear out during the contract – a leasing company can only average out what usually happens and apply those circumstances.

So there is a certain amount built in for items such as clutches or batteries – some will fail, some will not.

Beating the averages

If you can educate your employees to drive in such a way that they don’t burn through clutches or wear out tyres quickly, then you could get ahead of the curve and beat the averages a leasing company applies.

But this requires good monitoring and control of drivers.

Budgeting is also an area you would have to explore, and some fleet managers look at the costs being charged by leasing companies, especially at the start of the contract, and reckon they are getting a raw deal, paying way above what the car is actually costing.

Steve Jones, pricing manager for Lex, explains how sometimes the maintenance costs might look unbalanced, but that there is logic in the long run: “A leasing company will usually budget as follows for the total SMR cost of a vehicle: one-sixth in the first year, two-sixths in the second and three-sixths in the third.

“Any longer than that and the costs really start to rise, especially once you get outside the manufacturer’s warranty.”

If your leasing company starts claiming higher monthly rentals because of SMR in the fourth or fifth year, especially if you negotiate an extension to a contract, it’s worth remembering that the balance of vehicles’ wholelife costs start to change as you get into the fourth year and beyond.

Slower depreciation

While the costs of service and maintenance increase as parts wear out and need changing, the rate of depreciation starts to slow at the same time, so the two elements roughly cancel each other out.

‘Two fifths of fleets use independents'

Block exemption was supposed to free up the market for the servicing of cars, allowing independents to gain access to all the information needed to maintain vehicles to manufacturer standards, but at a cheaper price.

Progress has been slow but there is an increasing number of firms able to take on servicing work outside of the dealer network.

And fleets are demanding this service, with around two-fifths using independents for repair services.

Kwik Fit is one company that is benefiting. Mike Wise, head of Kwik Fit Fleet, said: “In 2008 vehicle servicing at Kwik Fit centres grew year-on-year by almost 90% and MoT work increased by almost 40%. We expect that to continue.”

Wise says the firm can generally offer a shorter time between booking and the service while also performing while-you-wait servicing.

He said: “Time is money and for that reason fleets want a fast and efficient service that is convenient for their drivers.

Extended fleet cycles

Wise added: “With an increasing number of businesses extending their fleet replacement cycles into a fourth year we expect to not only fit more tyres to company cars and vans, but also to undertake more MoTs and vehicle services as well as fast-fit maintenance repairs such as on windscreens and air conditioning unit recharging.”

So is it worth doing your vehicle servicing through independents? With hundreds of thousands of vehicles being serviced every year, Lex knows the market inside out. It uses both independents and franchise dealers.

Collection and delivery

Ian Thomson, director of driver services at Lex, says: “We use independents a lot – Nationwide Autocentres is our second biggest servicing network in spending terms.

“We expect collection and delivery, and the car washed and all our service standards maintained, even from independents.

“All things being equal, we will use the franchised dealer, but drivers soon appreciate that they are getting the better service, irrespective of the branding.

“With a lot of the independents we’ve seen that waiting times are shorter, especially for premium brands, while standards are just as high.”

And as figures from Lex show, there are some real savings to be made by using independents.