Many businesses traditionally support their transportation needs by purchasing vehicles from local dealers. Local garages and businesses are often favoured because they are in the right place to provide timely servicing and maintenance. Business will usually negotiate a significant discount due to the quantity of vehicles required and the ongoing business they will be providing to the supplier.
The current recession is prompting many businesses to look at alternative ways that they can provide and finance their transport needs.
Accountants and finance departments want to cut costs but, obviously, this must be achieved without any impact on the profitability of the business. Company cars is one area that many businesses are cutting back. Instead of providing their executives and sales people with their own dedicated company car, bought from the local dealer, many are turning to business car leasing arrangements. Some are choosing to use a car pool of leased automobiles that can be used by any member of staff who needs a vehicle.
It is estimated that this approach is saving companies between 20 and 60% of their annual transportation costs.
The same approach has been adopted by many companies requiring commercial vehicles. Leasing vans and trucks is not new to business but was previously primarily used by larger organizations. The current recession has led to many small and medium size enterprises opting to lease their commercial vehicles rather than buy them outright.
Businesses can really benefit from the many advantages that leasing provides over outright purchase. There are tax advantages for most businesses and the fixed monthly payments help accountants to budget their transport costs.
One of the main disadvantages is that the business never actually owns the vehicles which remain the property of the vehicle leasing company. Another potential disadvantage is that you must generally estimate the anticipated mileage and if this is exceeded significant costs can result.
If you are responsible for the transportation in your business, whatever your size, you would do well to research the potential benefits of vehicle leasing over outright purchase.
Tags: auto leasing, company car leasing, van leasing, vehicle leasing