Commercial vehicle funding needs a 'one stop shop'

Truck is niche: the specialisms required to meet customers’ needs for vehicles which serve a multitude of purposes and require bespoke bodywork and conversions, combined with the huge sums of upfront investment necessary to buy them, means the business of funding trucks has historically been the preserve of a few  dedicated suppliers.

Much could have been said for the light commercial sector a few years ago, but a growing number of leasing companies have created LCV divisions to better understand the needs of customers as they seek growth.

And, as they do, so they understand that many companies operating light commercials also operate heavies – and they are often looking for one-stop shop partners who can fund both. Consequently, leasing companies that have built their business on the back of funding cars are now launching products for vans and heavy commercials.

In the 2014 FN50, 14 companies provided details of their truck risk fleet. Among those companies, funding is provided for 10,233 vehicles above 3.5 tonnes. Put into context, that equates to 16% of trucks operated by the Fleet200, but just 3% of the total O-Licensed truck parc in the UK (just under 340,000) – although many trucks are bought direct from the manufacturer or at a franchised dealer.

The largest funder, not surprisingly, is Mercedes-Benz Financial Services. With the manufacturer having such a large presence in the truck market (it accounted for 20% of truck sales last year), it stands to reason that its financial services division will be providing the funding for a sizeable proportion of them – 5,194 to be precise, half the FN50 reported total.

Behind Mercedes-Benz comes Burnt Tree on 1,400 and Commercial Vehicle Solutions (CVS) on 1,057. CVS’s truck fleet almost matches its car and van risk fleet in number. They are the only three companies in four figures among those supplying data, although SHB Hire falls just sort on 887.

While Lex Autolease and LeasePlan, the UK’s two largest contract hire companies, did not provide figures for truck leasing, both do have a few hundred trucks up to 7.5 tonnes on fleet. Lex also funds larger HGVs on flexi-lease, but it isn’t a core part of its business, while LeasePlan’s trucks sit predominantly within its Automotive Leasing (public sector/local authority) brand.

Likewise, Alphabet, third in the FN50, also provides finance for a sprinkling of trucks – 213 to be precise – while fourth-placed ALD funds just 79.

The truck market is somewhat at odds with the direction in which the modern contract hire company is heading. Fleet management and outsourcing on cars and, increasingly, vans is making such companies far more like service providers than merely funders.

However, this tends not to be the requirement for many truck operators. Their vehicles are their livelihoods, not merely a form of transportation for people; they could not survive without them.

It makes reliability and downtime a crucial element to control and that means the responsibility for fleet management is held in-house.

Consequently, in the truck sector, leasing companies remain primarily providers of funds and a possible route to market for end-of-contract disposal.

It underlines the fact that many truck funders remain specialists: they do not offer funding for cars and vans and, therefore, do not appear in the main FN50 table.

The largest is Ryder, which funds more than 12,000 trucks, followed by Contract Vehicles and MAN Financial Services, both around 8,500 trucks.