An interview with Zenith Provecta
Zenith Vehicle Contracts was established in 1989 as a specialist provider of bespoke fleet solutions, concentrating on providing fleet management services for mid to large corporations. In 2008, Zenith bought ECO specialist, Provecta Car Plan creating the largest independent leasing company in the UK under the new trading name of Zenith Provecta.
More recently, Zenith Provecta teamed with Spanish banking giant, Santander to allow the bank to provide fleet funding while Zenith provides the fleet management.
Q: How do you think the recent emergency Budget will affect fleets and what advice do you have for companies to help them cope with these affects?
A: Whilst the Budget has not delivered a paradigm shift in fleet taxation, it has underlined the Government’s drive to a low carbon UK fleet. The changes to capital allowances and VAT mean contract hire (in particular used for low emission vehicles) is an ever more efficient way to fund fleet. We would advise companies to ensure that, if they have not already done so, they adopt a true Whole Life Cost (WLC) methodology towards their funding and vehicle choice list and utilise an experienced leasing company to carry out a full WLC fleet analysis. This will enable them to mitigate the vast majority of the negative impacts of the budget, whilst limiting the impact on choice.
Following the rise in VAT, leasing may become more attractive than outright purchase for some companies. It would be pertinent for such companies to review their vehicle acquisition method, to ascertain whether this continues to be the most cost effective method going forward.
Overall, our message to fleet managers has not changed; no one solution fits everybody. It is imperative to be objective in our analysis of fleets and then to tailor a solution to fit the needs of the business. The aim is to produce a package that is robust but able to respond quickly to an ever changing environment. For some companies, this may well result in a fleet that uses more than one funding method.
Q: You heavily promoted your new Salary Sacrifice Scheme as being a value-for-money approach when it first launched back in 2008, but does the scheme offer in today’s economic climate?
A: Providing cars in the most cost effective and sustainable way is core to Zenith Provecta’s strategy. Our salary sacrifice for cars solution, Salary Exchange, is a highly cost efficient and flexible method of providing low CO2 vehicles and can work for essential, perk and cash drivers, as well as ‘all employee’ schemes. We recognise that Salary Exchange is not suitable for all companies and there are other funding methods to consider, but it will offer substantial value to many employers and employees.
As the Government continues to promote low CO2 vehicles by reducing the Benefit-in-Kind tax payable, the value of Salary Exchange is likely to continue for a long time into the future. As the economy recovers, companies continue to remain cost aware and therefore a benefit like Salary Exchange, which can be provided to employees at little or no cost to the employer, remains an invaluable tool for attracting and retaining quality employees.
Q: How does your recent deal with Santander benefit your customers?
A: Our deal with Santander is based on the simple philosophy that each party operates their key skill sets within their core area. Certain banks, including Santander have taken the view that managing fleet and its complexities is not one of their main business activities, but asset backed finance most certainly is. We are extremely excited about our alliance with Santander, which will increase our already extensive funding capabilities. The deal with benefit both Zenith Provecta’s and Santander’s customers; providing a truly first class competitive fleet solution, with cutting edge systems and market leading service levels.
Q: 2010 has proved a challenging year for the motor trade. What challenges do you foresee in 2011?
A: The challenges will almost certainly be around business and consumer confidence, and to a great extent this will be determined by liquidity and by the willingness of banks to adopt more normal lending and credit practices. However, our strong banking relationships and the recovery of the new car market on a whole indicates a heightened level of confidence in the leasing and motor industries.
Residual values appear to have now stabilised and both the new and used car markets have almost recovered from the unprecedented effects of the recession. Manufacturer prices have been subject to some unusual fluctuations over the last 18 months, largely due to rising import costs, as a knock on effect of the weak pound. The value of the pound is improving and, although the increase in VAT will have an impact on purchase prices, the leasing of vehicles through a Whole Life Cost methodology can help to offset the vast majority of these fluctuations.
Q: You recently produced a report into electric vehicles. What would say to companies considering taking up an electric car in the near future?
A: Consider electric vehicles seriously, but do not commit until you are confident that the product is fit for its purpose, whole life costs are clear and that a proper support infrastructure exists. Until residual values have been established, leasing will not be a clear option and the high purchase price remains the major obstacle restricting their commercial viability.
The Government have pledged their support to electric vehicles and the development of a charging infrastructure. However, there is some doubt over whether their proposed £5,000 subsidy towards the cost of some electric vehicles will be implemented. With the Government’s spending cutbacks, it is not known how much financial support will be given to their development.
Despite the limitations, it is estimated that 10-15 per cent of fleet will be electric within the next decade, so serious consideration should be given to whether they may work for individual businesses in the future.
Q: Zenith also recently predicted a rising popularity of Employee Car Ownership schemes. What then, should a company consider in choosing between a Salary Sacrifice Scheme and an Employee Car Ownership scheme?
A: Employee Car Ownership schemes continue to provide real value to UK businesses and will increase in popularity with companies who wish to keep cars off balance sheet in the future. Deciding between a Salary Exchange Scheme and Employee Car Ownership is not straightforward and depends upon many things such as, vehicle profile, business mileage, tax rates, numbers of employees to name but a few. It is feasible that some companies may run both in parallel as they serve different employee populations.
As ever the advice we give is to assess things objectively on a case by case basis, taking into account the true total cost of ownership of each individual vehicle/employee profile.
Q: The Government is considering introducing a ‘fair fuel stabiliser’. How important do you think this is?
A: In principle it is sensible and it will remove some of the spikes in fuel prices. This should help business plan ahead with more certainty.
Q: Tell us more about the services Zenith Provecta offer?
A: At Zenith Provecta we see ourselves as a specialist services management business. Our expertise is in fleet solutions for companies that wish to outsource this non core activity to achieve lower cost and better efficiency. We also deliver standalone products such as hire cars and accident management solutions.
Our services start with a consultative approach. We assess a company’s needs, and then recommend the services that are best suited to them. Our solutions are delivered in-house to provide consistency of service and price. We have invested heavily in our systems and aim to continue to lead the market with our innovative forward thinking solutions, products and systems.
As an independent business, we do not have to sell a funding solution to obtain our revenue, therefore we can be analytical and objective and if a company is better off self funding their fleet then that is not an issue to us.
We pride ourselves on doing the basics of managing the vehicle/asset as efficiently as possible and we approach the spending of clients funds as we would our own. We have gain-share arrangements which mean that our interests our directly aligned with those of our clients. Added to this we have teams that are experts in their fields, whether that is Salary Exchange, ECO, Contract Hire or Contract Purchase, enabling us to overlay this expertise on the foundation of solid and efficient vehicle management.
Q: Zenith is known as the largest independent fleet management firm. What has enabled you to achieve this status?
A: Great employees who are knowledgeable, enthusiastic, take pride in their work and the business and who provide strength in depth. This is complimented by our loyal customer base, continuous investment in systems, and an innovative approach to fleet solutions.
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