My beef with companies that buy their vehicles
Spoiler alert! I am the president of a leasing company and, although this may come as a surprise to you, I recommend that all companies lease their vehicles as apposed to buy them. There, my bias is out in the open. I still want to touch on this subject though because it is something we see in a lot of companies. I’ll provide you my biased, albeit very smart, opinion and then you can make a better-informed decision from there.
The first problem that I see with purchasing vehicles is the fact that they are generally left in service too long and incur ridiculously high repair expenses. They are left in service too long because they are treated as capital expenditures. In most companies this requires a lengthy approval process before those funds are available. In the mean time, the old vehicle is depreciating and racking up maintenance costs. Leasing on the other hand forces you to make a decision as the lease term nears, yet still provides you with flexability. This is a perfect example of how leasing helps you maximize the optimal cycling point (http://www.mayfairleasing.com/blog/?p=23).
When companies buy a vehicle they look at the price of the vehicle and not the overall cost. Sure, you may be able to save a few bucks upfront buy purchasing a lower- priced model but are you considering how well it holds its value or will cost to operate? When you lease a vehicle you are comparing the total cost of ownership, not just the initial sticker price.
One of my favorite things about leasing is that it is easy. There are no heavy upfront taxes, intense record keeping or wasted capital. You simply get a pristine vehicle that will be properly maintained and replace at just the right moment. As an executive, not even I want to spend a lot of time thinking about company cars. Leasing allows for a simple, cost effective plan.
Alright, I have ranted and raved enough. Of course this is an important subject for me but I honestly would not bring it up unless I truly believed it would help companies save money and time. Hopefully next time your company is considering buying a vehicle you will at least be able to get them to consider an alternative. Thanks for the ear!