Fleets face 'worst-ever' supply issues

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THE worst new vehicle supply problems in a generation are causing the fleet industry huge problems with sky-rocketing daily rental rates and lead times the longest in living memory.

Andrew Leech, founder and managing director of EV salary sacrifice and fleet management specialist, Fleet Evolution, described the current situation as “the worst I’ve known in my 20-plus years in the automotive industry”.

He added: “Due to the supply issues, we are facing unprecedented increases in daily rental rates. We work with most of the major rental providers and they are putting their rates up by as much as 60% on all plug-in hybrids and battery electric cars.

“Rental lead times are going from hours to days and even weeks in some cases. It’s a case of supply and demand and, with very limited supply, suppliers are increasing prices by levels I would not have thought possible only a short time ago.

“This is having a major knock-on effect for drivers who are keen to switch into electric cars at this moment in time. Firstly, there is very limited supply of certain EVs with longer and longer lead times, due mainly to the global shortage of semiconductors.

“However, the war in Ukraine is also having an effect and – although I would never compare what’s happening in our industry to what’s happening to the people of Ukraine – the simple truth is that lead times for models such as the Volkswagen ID.3, ID.4, ID.5 and Audi Q4 e-tron, parts for which are manufactured in Ukraine particularly electrical cable harnesses, have gone off the scale.”

Leech said that, in normal times, turning to rental suppliers to fill the gap while waiting for a new EV for a customer was usual practice.

“However, the new rates we face are causing us huge problems with some electric models being quoted rentals as much as £950 a month, which is unprecedented in my experience. There is no easy solution to any of this. At Fleet Evolution, we are in favourable position because of the way our salary sacrifice schemes are set up and the fact that we self-insure.

“That means that when an EV comes back from a customer for reasons such as redundancy or leaving the business, we are able to reallocate it to another driver, even at another customer.

“We are able to retain returned cars, even though we could probably sell them at a profit because of the way resale values have risen, and pass them on to our customers who are desperately waiting for new EVs.”

Leech said that, despite the problems, Fleet Evolution was enjoying a ‘frenetic sales period, the busiest in the last 10 years due to high demand for electric cars.

He added: “We have had to take on extra office space and more staff to cope with the rising demand as more organisations look to switch to electric vehicles. Our frustration is that, because of these once-in-a lifetime supply issues, it is taking longer and costing more than we would like to meet that demand.”