Multi-bid fleet acquisition policies are becoming an important method of cost savings for fleet managers in a post-pandemic business environment.
The benefits of multi-bid fleet acquisition policies are leasing rate reductions which can be between £20-£50 per month cheaper than other methods and reduced exposure to risk.
Fleet management firm, CBVC Vehicle Management, has published a White Paper on The Benefits of Multi-Bid Vehicle Funding that examines the pros and cons of different business contract hire fleet acquisition methods. It concludes that multi-bid is the most effective method to keep downward pressure on fleet costs.
Managing director of CBVC Vehicle Management, Mike Manners, explained: “The benefits of multi-bid is that fleet renewal requirements are put before a panel of funders and the cheapest on the day wins the business.
“It means that fleets always benefit from the best value, delivering significant cost savings.”
The White Paper has been written by experienced fleet executive, Keith Allen, formerly the managing director of ARI Fleet and ALD Automotive.
“Relying on one provider puts you at risk of ‘rate creep’ along with exposure to their risk profile. Both factors can severely impact business contract hire rental rates. By spreading your risk over a panel of funders eliminates these risk elements,” added Allen.
“Using a fleet management provider that has the ability to deliver multi-bid acquisition, provides one point of contact but transparent pricing, reduced lifecycle costs and enhanced service levels.”
While sole supply offers one master lease to administer and full access to the lease market, the White Paper concludes that it leaves fleets exposed to short term pricing strategies and rate fluctuation following residual value reviews.
With multi-supply acquisition a fleet can competitively procure leasing quotations from more than one lease company, but is then faced with multiple contracts, invoices, and relationships to administer.
With multi-bid acquisition a fleet can competitively procure business contract hire quotations from one fleet management company with a panel of approved lease companies. Among the advantages are cost optimisation on each new vehicle order and more consistency in the total cost of ownership with a single point of contact.
Author Keith Allen concluded: “If you are running a fleet of say 400 vehicles, then over a four-year term you could potentially be saving more than £380,000 based on a cost saving of £20 per month per vehicle by adopting a multi-bid approach to procurement. The benefits to your company’s bottom line cannot be ignored. And nor should they.”