Used car supply could be impacted by longer replacement cycles in the fleet sector, as businesses re-assess the way they operate vehicles.
A number of fleet operators have been forced to extend contracts due to new vehicle supply shortages and the Coronavirus pandemic
These longer cycles could be here to stay, according to Peter Golding, managing director of fleet management software provider FleetCheck.
He said: “Fleets have been hanging onto vehicles for longer either because they didn’t cover many miles during the pandemic or they have simply been unable to source replacements.
“We’ve gone from a situation where generally cars were operated for replacement cycles of three-four years and vans from four-five, to one where around a year has been added on average across the board.”
Golding added that fleet managers realised their vehicles had the potential to be operated for markedly longer than had occurred in the past and had learnt a new skillset to enable this to be done economically and efficiently.
Fleet and business registrations account for around half of all new car sales each year. The sector drives a high proportion of three-five-year-old used stock into the market.
In some cases, fleet operators have extended their policy for cars from three to five years in a single move
“What has become clear over the last few months is that the fleets with which we work do not seem to view these extensions as a one-off. In the future, they plan to operate vehicles for longer on an ongoing basis,” Golding added.
Moving beyond a three-year cycle takes most cars and vans beyond the manufacturer warranty, as well as requiring them to undergo an MOT test, however. Providing dealers with additional aftersales opportunities.
The arrival of electric vehicles (EVs) on fleets is also playing a role in the process of extending cycles as they suffer less wear and tear than their petrol and diesel counterparts, according to Golding.
Used car retailers rallied against three months of COVID-enforced dealership closures and vehicle supply shortages to deliver annual sales up 11.5% year-on-year in 2021.
The Society of Motor Manufacturers and Traders (SMMT) has reported that last year’s used car market was just 5.5% down on the pre-pandemic five-year average despite the issues.