Fleets need to look carefully at contract extensions from SMR angle

Fleets need to look carefully at contract extensions from SMR angle

Fleets extending replacement cycles in the wake of the coronavirus crisis need to consider the impact from a service, maintenance and repair (SMR) angle.

Debbie Fox, Commercial Director at epyx, says that the SMR profiles of many vehicles often involves considerable extra expense in years four and five.

She explained: “It seems like an obvious gain to defer replacing vehicles because it looks as though you are saving money when budgets are under pressure. However, the truth can be different. If you examine the cost of SMR over time, it tends to rise quite quickly as the vehicle ages.”

According to industry SMR data, she said, this especially occurred around the point of the first MOT at three years*, which was also where the warranty ended for most major manufacturers.

“There are several reasons for this and the picture does vary quite considerably when you look at different models and mileages, but you may find that you will have to buy a complete set of tyres or pass the point at which a major scheduled service is due. For some vehicles, there may even be relatively expensive one-off costs such as the replacement of a timing chain.”

It was potentially prudent to consider looking at extending replacement cycles but, if the object was simply to save money, then a new vehicle or lease could be cheaper, Debbie added.

“Really, the important thing is to do the maths and work out which option results in the lower cost. If you lease vehicles, your leasing company should be able to help with this.”

*Example taken from Fleet News calculator – https://www.fleetnews.co.uk/costs/car-running-costs/compare-list/20244486,20244492,20244489

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