Longer leases and warranties should match actual fleet replacement cycles.

author: FutureCar Staff    

FleetCheck is advising that fleet lease contracts and warranties on cars and vans should be lengthened to align with the new 'real-world' replacement cycles post-pandemic. The company has observed that cars are now being operated for close to five years, compared to 3-4 years previously, and vans have moved from 5-6 years to up to 7-8 years.

According to Peter Golding, the managing director of FleetCheck, the post-Covid shortages have forced fleets to operate vehicles for much longer than planned, demonstrating that longer cycles can be safely and economically achieved with proper management. Golding also mentioned that the higher initial prices and uncertain residual values of electric vehicles are pushing up costs, providing further impetus to lengthen replacement cycles permanently.

However, the main issue with extending replacement cycles is the change to service, maintenance, and repair (SMR) arrangements. Golding argued that longer manufacturer warranties should be part of this move. While modern cars and vans tolerate age and mileage better than in the past, they still require higher levels of maintenance over time, especially for unexpected breakdowns. Golding emphasized the need for manufacturer warranties to align with these new cycles, as some major fleet car and van makers only provide three-year warranties, which is inadequate for modern fleets.

Extended warranties would also likely result in manufacturers keeping SMR within franchise dealer networks for longer, which makes sense for all parties involved. Golding also addressed human resources considerations, noting that objections from drivers to longer replacement cycles are limited. In many industries, most car drivers are accepting five-year replacement cycles because modern vehicles not only last longer mechanically and electrically but also maintain their cosmetic appearance over time.

In conclusion, FleetCheck recommends lengthening fleet lease contracts and warranties to align with the new 'real-world' replacement cycles post-pandemic. Extending replacement cycles can be safely and economically achieved with proper management, and longer manufacturer warranties should be part of this move. The acceptance of longer replacement cycles by drivers is supported by the improved durability and cosmetic appearance of modern vehicles.

FutureCar Staff