The costs associated with an LCV are not that easy to predict and pin down. However, before you can even begin to consider the costs of managing your fleet, there’s a fundamental question to answer: how many vehicles will your business need?
You know better than us that this kind of prediction is time-consuming and complex. Forecasting your fleet requirements needs incredible attention to detail. Worse, the details and variables that could affect your business and fleet requirements in the next three years are sprawling.
As a result, your fleet predictions can bring with them a degree of risk. This could be potentially reduced when, and if, you’re able to combine fixed fleet numbers with a flexible ‘top up’ approach. So, how do you predict and future-proof your fleet predictions for the next three years?
Why fleet predictions come with risk.
Few of the forecasts any business make are likely to be 100% completely accurate. In the van fleet world, your LCV predictions can often make it more difficult to retain your business agility. This is because most traditional approaches to acquiring and using commercial vehicles come with commitment. For the most part, once you have predicted your needs, you’re required to stick to them.
Frustratingly for fleet managers, both underestimating and overestimating your requirements could have a very real impact on business.
Underestimating your needs affects service.
If you make a low prediction about your fleet in 12, 24 or 36 months, you may suddenly find yourself unable to service customers effectively.
If your business spikes, or if you need to respond to a short-term fluctuation in seasonal periods, you may find yourself struggling to keep up without a sufficient fleet to support you.
Overestimating your needs affects your finances.
To meet demand, it is tempting to play it safe and overestimate the fleet you will require in the future. However, this often means tying your capital up in vans you don’t actually require, or only require occasionally.
In addition, every van in your fleet comes with ongoing management and maintenance costs. If your fleet is not optimised and streamlined wherever possible, it presents an ongoing cost every year.
The variables that impact fleet requirements.
To eliminate waste and maintain excellent service, any prediction you make about your fleet in three years needs to be incredibly accurate. This is only possible with a deep understanding of the many variables that will affect your fleet in the months and years to come.
Typically, a forecast would be made using historical information – looking at patterns in your markets, industry and business over the past three years to predict the next three. However, we are in a period of remarkably fast-paced change in every area, from the economy, to compliance, to new technologies and business models.
Turbulent economy and political landscape.
Since the Brexit referendum, we’ve seen an immediate impact on the pound, downsizing in various industries and the announcement of plans for major businesses to change their UK presence following our exit. There is no doubt that, as the fallout of Brexit becomes clearer, every business will be trading in a new landscape that is harder to predict.
Meanwhile, with so many LCVs coming from non UK manufacturers, the changing economic climate could have an impact on the costs associated with commercial vehicles themselves.
Even without the special case of Brexit, global economies remain particularly volatile. Our own country’s general election has economists predicting short-term economic volatility, as inflation has gone through a recent upturn. However, even the smallest fluctuation in the state of our economy can affect everything - from consumer spending habits to commercial costs.
As a result, it is less likely that any prediction you try to make for your future fleet requirements, based on historic economic events, will be accurate.
Changing legislation and compliance.
At the same time, legislation in key areas like air quality and emissions has been made and is again rapidly changing. Few could have predicted this year’s recent changes in Vehicle Excise Duty for instance and, looking three years into the future, there will undoubtedly be more changes to come.
This increasingly strict legislation seems to point to fewer fleet managers wanting to choose to commit to specific vehicles within a fleet. In fact, as the British Vehicle Rental and Leasing Association (BVRLA) reports, we expect to see more businesses downsizing to LCVs from larger vehicles in the next twelve months, moving their compliance.
Until you know how the legislation will affect your vehicles, you may find it harder to accurately predict the vehicles you will want and need in your fleet. Committing to any vehicle is potentially committing to rapidly increasing costs.
Disruptive new technologies.
Empowered by technology, conventional business models are changing. In supply chains, logistics, retail and beyond, new ways of doing business are surfacing all the time.
Today’s emerging innovations cover everything from drone technology to self-driving vehicles. In the next three years, any and all of these technologies could mature and, when they do, create a ripple effect on everything a business does.
The scale of new innovation could affect demand, costs, capabilities and create new opportunities. Any of these outcomes will change how we do business again and, in turn, the resources you’ll need in terms of your fleet.
Seasonal peaks and troughs.
While the economy, changing legislation and new technologies promise to have a sweeping impact on markets in the next three years, even smaller fluctuations weaken your fleet predictions.
Every business can look at previous demand to predict seasonal peaks and troughs though. There’s a good chance you can name your busiest month off-hand at a moment’s notice, for example.
Conversely, it is not quite as easy to predict the scale of that peak or trough in advance. You know you will need more vans, but exactly how many?
In short, even if you can predict your average requirements with a great degree of accuracy, seasonal fluctuation is inevitable. If you commit to the size of your fleet for the long-term, you are left with a choice between an LCV shortage at peak times, or excess in your fleet all-year-round.
Taking the risk out of your fleet.
As you’ve seen, it is perfectly possible to predict your fleet needs for the next three years. You just need to become an authority on economics, politics, technology, and human consumer behaviour!
So, in a world of uncertainty and unpredictability, why take a risk that could affect your ability to fulfil future commitments to your customers and your business?
At Northgate, we give you a way to fix your fleet numbers, as well as servicing and management costs, with the added convenience of adding or removing extra fleet vehicles when you need them.
We’ll help you get the fleet you’re confident you’ll need, then let you ‘top up’ your vans with hires whenever you need to respond to seasonal demand or changing circumstances. For example, one customer uses 700 vans all-year-round, then rapidly scales to around 3,000 every Christmas.
What’s more, with Northgate you get the widest range of choice, local service via 58 branches and workshops, and fast repairs that aim to get you back on the road in 2 hours.
With a fix and flex rental solution from Northgate, everything’s taken care of – letting you bring certainty to your three-year predictions.
Watch the video below to find out more on how we can help you future-proof your fleet needs for the next three years.