Delivery problems with vehicles in Germany are having many side effects. For example, a shortage of rental cars and increased used car prices (the original article for this “Bermuda Triangle of Costs” can be found here). But that’s not all by a long shot. It actually gets even better. Because an unwritten law in the leasing industry has recently ceased to apply. This law implied that a leased car need not be returned if the customer dutifully continues to pay the monthly installments. This was an advantage for the lessors, because it allowed them to make a profit from the lower loss of value in the end (you can find out here just how expensive this is for your company and why a constant rate is by no means an advantage for your fleet). For this reason, no one had ever come up with the idea of demanding the return of a leased vehicle on time. That has now come to an end.

In fact, contract extensions are currently being denied in some cases. Yes, you read that right: Due to supply bottlenecks, customers want to renew officially, but some lessors refuse to do so. Perhaps it is because used car prices are currently at new record highs and lessors prefer to sell the vehicles instead.

But what do we know from our own experience?

• If we request an extension for our customers, it will actually be rejected by some leasing companies. Apparently, it is no longer feasible to obtain a contract extension three months before the end of the contract.
• This makes it even more important for fleet managers to correctly estimate how long vehicles will be used. However, this is not always possible in practice.
• The fact that individual lessors sometimes need up to two months to answer these requests does not help with serious planning.
• The result is always the same: Due to these inflexible leasing contracts and regulations, fleet costs suddenly explode.

What concrete actions can you take?

With manufacturer leasing companies, when asking for an extension it may help if you mention in an aside that the subsequent vehicles will also be leased from the same manufacturer and the same leasing company. This should result in the company suddenly becoming much more accommodating. When dealing with suspicious employees, it is best to already have the new contract number at hand.

And from the start, avoid having to rely on a leasing contract. Choose a leasing option that won’t leave you hanging in difficult times. This way, you can build up a pool of vehicles with more flexible financing contracts and benefit from them in good as well as difficult times. What options do you have?  An overview of the common forms of financing can be found here. A detailed comparison of the two predominant forms of leasing can be found here.