Avis FleetBlog


How junk status affects the fleet industry

Following President Jacob Zuma’s cabinet reshuffle in March 2017, ratings agencies Standard & Poor and Fitch downgraded South Africa to junk status at the beginning of April. The shock waves were felt all over South Africa as economists predicted the consequences of the downgrade: a drop in the rand, less foreign investment, a hike in petrol, food prices and transport costs, and higher interest rates on purchases including houses and cars. How will these developments affect the fleet industry and what should fleet managers do to weather this time of economic and political upheaval?


Nail down the hatches


During periods of economic or political instability, businesses need to focus on consolidation. Since growth is expected to be limited, businesses have to retain their existing customer base. One way of doing this is to streamline procedures and policies to ensure that customers have the best experience possible.


Outsourcing makes good sense in the fleet space

  • Borrowing against core business capital to buy something like a vehicle makes bad business sense because it will increase interest and result in you having to pay more tax. Investing capital in depreciating assets is not the best option when it comes to running a vehicle fleet.

 

  • You reduce risk when you outsource your fleet to a fleet management company. Avis Fleet mitigates the risk on maintenance and resale of vehicles so your business doesn’t have to.


  • Buying vehicles will be much more expensive due to the economic upsets. Outsourcing your fleet to Avis Fleet means your bottom line won’t be negatively affected.



Reduce the risk of owning a fleet


Avis Fleet is flexible: our solutions fit our customers’ needs. We offer full maintenance leasing that simplifies vehicle management. We take care of maintenance at a fixed monthly rate, and you don’t have to worry about the long term costs and risks of owning the vehicles. This option has a positive effect on cash flow: there is no capital outlay for the period of the lease. Since cost monitoring is fixed for the duration of the contract, you can factor this into your budget as a predictable expense.


Outsourcing your fleet management requirement means you’re also outsourcing administrative burdens, including the payment of licences and traffic fines. Avis Fleet will send you monthly management reports and provide you with 24/7 real time reporting to put you in the fleet management driving seat.


Find out more about the financing solution

 

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