What is Sale and Leaseback?
"I think there are two strands to Hitachi Capital Vehicle Solutions’ Sale and Leaseback offering.
Let’s say an organisation is operating a fleet of 100 vehicles. Hitachi Capital Vehicle Solutions buys those 100 vehicles and leases them back to the organisation within an agreement that’s designed to deliver particular service levels.
However, very few Sale and Leaseback arrangements take place without some vehicles getting replaced. As most fleets will contain a number of vehicles where the specification needs refreshing, we carry out a new fleet strategy exercise based on new manufacturer technology or innovation around ancillary equipment use to improve efficiency and productivity. Hitachi Capital Vehicle Solutions’ fleet strategy is, therefore, a very important part of the overall Sale and Leaseback process."
Can you describe the fleet strategy process in more detail?
"It’s a very consultative process. Generally speaking, Hitachi Capital Vehicle Solutions’ experts would visit a customer to learn as much as possible about their business operations and needs. From there, we would develop a draft strategy that the customer can adapt as they see fit. Once the customer is happy, that’s when we set about implementing the strategy, with a strong focus on improving vehicle & ancillary specifications to improve asset efficiency and productivity, also looking at ways to deliver better service levels and reducing overall fleet costs, Alternative fuels would also form part of any future strategy
Hitachi Capital Vehicle Solutions knows that our specialist customers require specialist treatment. Every organisation is different, and I think that you need to really get involved to understand what they do and how they do it. We’ll speak to management and we’ll speak to drivers. We’ll ask plenty of questions. What problems are there? What could be changed? That level of care is what defines our fleet strategy process."
What does Sale and Leaseback mean for the customer’s fleet?
"The short answer is that it makes the fleet better. This is self-evidently true in the case of a customer’s older vehicles, which are replaced with ones that are more productive and more cost effective. But it’s also true for newer vehicles. When a vehicle is two or three years old, its maintenance costs may be low. But if the fleet owns that vehicle for any length of time, then those maintenance costs will, in theory, keep on rising. Sale and Leaseback avoids this problem. The lease will fix the costs of maintenance for the duration of the contract. The customer has more certainty from a budgetary point of view.
And it’s not just maintenance costs. Everything will be managed by one provider, Hitachi Capital Vehicle Solutions, ensuring consistent procedures and levels of service. It’s much more convenient for the customer."
What other benefits might the customer experience?
"Outside of having a better fleet, the main benefit of Sale and Leaseback is probably the cash injection it provides. The equity that’s released from the sale of any vehicles can be used to grow the organisation or to achieve other commercial goals.
But, just as importantly, it also frees up time. When an organisation owns all of its vehicles, it has the day-to-day hassle of keeping them maintained and compliant, organising repairs, finding replacements, and so on. By handing the management of the fleet to someone else, most of these concerns are taken away – leaving more time for business."
Can Sale and Leaseback even make a fleet greener?
"Absolutely. This is a crucial part of the fleet strategy process. We consider a customer’s operational needs, as well as their operational locations, and determine whether alternative fuels would be best for them. For instance, if they work within London, which already has a Low Emission Zone and is soon to have an Ultra-Low Emission Zone, then it may well be that electric or compressed natural gas or liquid natural gas is a solution for them. With the introduction of Clean Air Zones around the country, the same goes for places outside of London. We consider everything on a case-by-case basis."