MOTO R I N G
Driving down fleet street in a car you
Beg, Borrow OR
LEASE
Driving on someone else’s money is the most comfortable ride you can get. And while times and packages have changed, the great company car carrot is as tempting as ever. RODERICK EIME reviews the lease scene in the post-GFC landscape.
The concept of a company car provided by an employer has always been an attractive part of any remuneration package. For many years it was an understood part of any executive package. That was until Paul Keating introduced the Fringe Benefits Tax (FBT) in 1986. GST further complicated matters when it came into effect in mid-2000. Employers, large and small, moved away from maintaining their own fleet of executive vehicles and began to adopt a new concept called “novated leasing”, commonly called “salary sacrifice” around the water cooler.
If you’re reading this now, there is a better than 50/50 chance you have one of these leases and if you don’t, then perhaps you should be asking yourself, why not?
Dan Hawkins, General Manager Business Sales for Hyundai Australia, spent 20 years in the fleet business with such companies as Esanda and LeasePlan.
The advantages of novated leases for individual employees can be summed up as:
“Novated leases were very popular in the early 2000s and confident executives treated themselves to some very nice cars. When the GFC struck, some of the pitfalls of novated leasing appeared,” says Hawkins.
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paying less income tax
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saving the GST on the purchase price of your next car
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saving the GST on all the running costs, including fuel
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“This is where the term ‘whole-of-life’ cost became a new phrase in vehicle leasing. The low resale value of these vehicles caused a lot of grief to many former high flyers.”
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making “budget-wise” payments inclusive of rego, insurance and maintenance the convenience of a lease company-supplied fuel and maintenance card, and packaging your choice of car - new, used or even the car you already own. (source: nlc.com.au)
Because novated leasing shifts the responsibility for lease payments to the employee, if that golden guy suddenly finds him or herself without the six-figure salary, the car becomes an expensive accessory they need to shed quickly.
George Georgiou, ORIX General Manager Fleet, acknowledges many fleet leasing companies had to seriously reappraise their financing policies. What fleet managers are discovering as they go through the process of reviewing fleet policy in their business is that the postGFC finance scene is drastically different to that which existed pre-GFC. “Wholesale funds are still limited and the cost of funds has increased, based on risk profile. The big banks are reviewing all customers and limiting exposure by industry group. It’s become more difficult for mid-tier companies and SMEs to gain funding, and heavily geared businesses particularly are suffering.”
George Georgiou, ORIX General Manager Fleet
“This is where the term ‘whole-of-life’ cost became a new phrase in vehicle leasing. The low resale value of these vehicles caused a lot of grief to many former high flyers.” Quest Kudos 23
MOTO R I N G
FLEET STREET EXCLUSIVES
The Hybrid Camry energy monitor gives the dashboard a new age appearance.
PAINT THE FLEET GREEN As the posters of the Gordon Gekko types are torn down and effigies burned, the big corporate money men are running for the trees. Green energy, low carbon footprints and renewable resources are the rallying calls of today. Although many companies wave the enviro-banner with gusto, the chances are the CEO still drives home in a petrol V8 SUV. “Technologies like hybrid power are developing quickly, but are still not cost-effective for fleet owners yet,” continues Hawkins. “The residual and resale value of hybrid vehicles is something of an unknown at the moment.”
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“Drivers who accumulate lots of miles on their vehicles will benefit from the highly developed diesel and LPG technologies currently available. Even though the initial purchase price may be more, residual values are high and running costs low.”
Hawkins believes his company, Hyundai, is well positioned to make inroads on the traditional fleet leaders, Ford, Holden and Toyota. “Drivers who accumulate lots of miles on their vehicles will benefit from the highly developed diesel and LPG technologies currently available. Even though the initial purchase price may be more, residual values are high and running costs low.” Hawkins also is quick to point out that 5-year warranties considerably add to whole-of-life value for cars onsold within the factory warranty period.
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While the numbers might not add up yet, the growing interest in hybrid technology has given car manufacturers and buyers fresh hope for a sustainable future. Many experts believe the petrol-electric hybrid drive vehicles are merely an interim technology until hydrogen fuel cells take over.
Toyota Camry
Holden Commodore VE
Toyota is Australia’s top-selling car brand by a country mile. The new Australian-built hybrid model has stolen much of the limelight, but it’s the venerable 2.4 petrol version that keeps on selling. The best seller is also the most fuel efficient in its segment and legendary Toyota reliability and resale keep this model ticking over nicely. 2009 SALES: 20,846 (8th top seller and medium car segment leader)
Launched in September 2009, the Model Year (MY) 2010 Commodores now feature, according to Holden, the most fuel efficient Australian-built six cylinder vehicle in the market. An all-new 3.0-litre V6 engine, the smallest Commodore engine offered to buyers in more than 20 years, and the familiar 3.6-litre are offered. The new Spark Ignition Direct Injection (SIDI) technology improves fuel efficiency while increasing power and lowering emissions.
BASE MODEL COST: $29,990
2009 SALES: 44,387 (top seller and large car segment leader)
3-YEAR OLD TRADE-IN VALUE: $12,000 - $14,000
BASE MODEL COST: $39,900
ENGINE: 2.4 4-cyl
3-YEAR OLD TRADE-IN VALUE: $12,100 - $14,200
GREENHOUSE RATING: 6.0/10
ENGINE: 3.0 or 3.6 litre V6 GREENHOUSE RATING: 5.5/10
The electronics may appear complicated; the concept of hybrid drive is not. A hybrid vehicle starts by recapturing its own, otherwise lost, energy using “regenerative braking”. Put simply, when you are not “on the gas” the car recharges itself - so there's no hooking up to the 240V overnight. Advanced, lightweight Nickel Metal Hydride (NiMH) batteries, sophisticated versions of your mobile phone and camera batteries, deliver previously unheard of power and recharge very quickly. Hybrids haven’t been with us long enough yet to fully analyse their market impact, but Custom Fleet have some experience offshore. “We’ve provided customers with hybrid vehicles under Fully Maintained Leases for several years now,” says Neil McKay, General Manager, Sales for Custom Fleet Australia. “Customers view a hybrid as a suitable vehicle to help reduce carbon footprint. Values in the secondary market for hybrids will be tested over the coming months as some of these vehicles come to the end of their lease term. Experience in the U.S. has been good and we should experience the same in the local market.” ■
Hyundai i30 The i30 is the sharp end of a brand reinvention for the Korean manufacturer. The much-praised turbo diesel engine had critics paying attention, while the 2.0 petrol is the mainstay of ever-growing sales. Build quality, styling and driver appeal have raised the Asian brand into the big league. (And watch out for the new i45 medium size sedan released in May.)
Ford Falcon FG Upgraded in April, the trusty Falcon now features ZF sixspeed automatic standard across the range and boasts an economy improvement of up to 8.5 per cent as a result. A host of hardware upgrades, software revisions and calibration enhancements further refine the Falcon. 2009 SALES: 31,023 (5th top seller)
2009 SALES: 21,414 (6th top seller and small car segment leader)
BASE MODEL COST: $40,290
BASE MODEL COST: $20,390
ENGINE: 4.0 inline 6 cyl
3-YEAR OLD TRADE-IN VALUE: $12,000 - $14,000
GREENHOUSE RATING: 5.0/10
3-YEAR OLD TRADE-IN VALUE: $11,100 - $13,100
ENGINE: 2.0 4-cyl GREENHOUSE RATING:6.0/10
For more information: Green Vehicle Guide www.greenvehicleguide.gov.au Red Book www.redbook.com.au Federal Chamber of Automotive Industries www.fcai.com.au Quest Kudos 25