Fleet managers are feeling the financial brunt of the leasing industry’s increasingly tough stance on end-of-contract recharges.

Recently, many leasing companies have become stricter on charging for damage and mileage at the end of contracts.

“It has been noted that recharge bills are being received by some fleet operators for smaller items/damage that perhaps they would not have been charged for, say, 12 months ago,” said ACFO chairman Julie Jenner.

However, she said “there is no overwhelming view that leasing companies are increasing their charges on a grand scale”.

Stewart Whyte, managing director of Fleet Audits Ltd added: “Most – but not all – lessors now seem to have activated the end-of-contract charges built into their contract documentation.

“Historically these charges are not generally applied with great vigour, but contract hire service providers now have little choice but to seek to make every penny possible out of every deal. With residual values still much lower than what was probably predicted three or four years ago, the losses on disposal continue to mount in the bracketed/ red-ink section of the books.”

BVRLA chief executive John Lewis confirmed its members were concentrating on maximising revenue from every vehicle. He said: “With the economy in recession and residual values less certain, they are having to apply these refurbishment charges in order to optimise the disposal value of their vehicles."

Fleet managers are advised to make themselves familiar with the BVRLA’s Fair Wear and Tear Guide so that they are aware of the minimum standard they need to keep their vehicles in.

Whyte recommends that prevention is the best cure, saying knowledge of the potential for charges should be included in a contingency plan, and drivers should be disciplined when their damaged cars (and vans) are spotted.

“The fleet manager should have a set of digital photos of every vehicle just before it’s returned,” advised Whyte. “Be realistic – if there’s a dent or a deep scrape, identify it and own up.”

Industry analyst Colin Tourick recommended communication with the leasing company now, rather than later: “The BVRLA Fair Wear and Tear Guide sets out very clearly the dividing line between damage that the lessor will accept and damage the lessor will wish to recharge to the client. The problem is that, where the damage is so bad that it has to be recharged, there are no rules about the amount that should be charged.”