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New approaches to SMR needed due to rise of personal contract hire, says Epyx

New approaches to SMR needed due to rise of personal contract hire, says Epyx

New approaches to service, maintenance and repair (SMR) will be needed as personal contract hire (PCH) increasingly makes an impact in corporate circles, according to Epyx.

Tim Meadows, commercial director, said that typically 80% of cars on traditional corporate contract hire were leased with inclusive maintenance packages but that the figure fell to around 20% for PCH.

He explained: “Fleet leasing companies are selling increasing amounts of PCH in a corporate environment, either to individuals or as part of affinity schemes linked to employers.

“It’s a market that is set for major growth over the next few years and, largely, an incremental one that is sold alongside traditional contract hire solutions to non-core company car drivers.

“However, unlike the contract hire that makes up the majority of business for major lessors, only a minority of PCH deals are sold with maintenance included.

“This creates a whole series of issues. For the leasing company, this means they don’t know whether a vehicle is being regularly serviced to manufacturer standards, which will inevitably affect values when it comes to remarketing. It makes them uncomfortable.

“Also, for the employer whose employee is using the vehicle on business, it is much less easy to find out whether the car is being maintained to standards in line with their duty of care obligations. Again, this is something that creates a great deal of angst.”

Mr Meadows said that Epyx had been involved in the development of a number of new maintenance packages through its 1link Service Network platform that was designed to close that gap and he expected to see more emerge in the near future.

He said: “Some leasing companies have developed what you might call ‘just add fuel’ packages that include maintenance and are priced to appeal to PCH customers. These should help to drive penetration.

“Also, there are likely to be further developments in service plan-style products, with solutions aimed directly at the PCH sector, and we have also been involved with discussions in this area.

“However, we also believe there will be further product innovation when it comes to service and maintenance over the next few years. It is in no-one’s interest to have PCH vehicles being used on fleet business where the service record is haphazard or cannot be tracked.

“Both leasing companies and employers will be doing everything they can to promote these products to PCH buyers and Epyx is very much part of that conversation.”