Total Motion developed the Hybrid Leasing concept in 2004 as an innovative approach to vehicle leasing. It has been widely adopted by the fleet management industry since then and is broadly seen as a means of transferring the power from vehicle leasing companies to the client, in terms of flexibility and decision-making.
What is hybrid leasing?
Hybrid leasing is a way to take the regular contract hire model but provide the client with more detailed information and also a say in how the deal is structured. We feel that giving the client more flexibility provides a much better product which can be tailored more successfully to the singular demands of your organisation.
How does hybrid leasing differ to standard vehicle leasing?
There are five main ways in which hybrid leasing puts the power in your hands to ‘fine tune’ a leasing agreement to suit what your organisation needs. This is a combination of providing more detailed information upon which to base decisions, and offering more options as to how the deal is structured.
Maintenance: service and maintenance is a key component of most vehicle leasing deals, and many organisations like to include this cost in their monthly price and then forget about it. However, hybrid leasing allows you the option to negotiate your own service and maintenance deals. If you have the time and resources, you may find a better deal than the approved service and maintenance contractors we use. So hybrid leasing allows you the option to do that, or not.
Actual Whole Life Cost system (AWLC): the AWLC system is another concept we developed, now over 20 years ago. This uses constantly updated data to enable the client to make informed decisions on manufacturers and vehicles, the true cost of vehicles, how long a lease period on a particular vehicle should last and other trends which can influence the cost effectiveness of a car leasing deal. The Actual Whole Life Cost System helps to ensure you have a genuine and accurate cost for leasing that vehicle at that moment in time. This is achieved by taking into account several different usage and associated time-sensitive factors far and above merely depreciation.
Early termination: we don’t believe customers should be automatically punished for ending an agreement early, because we are alive to the fact that circumstances change and often this is unforeseen. So we don’t penalise clients with excessive charges for ending an agreement early, instead we use a simple calculation to work out how to fairly represent a vehicle’s value. That calculation is:
Balance outstanding less the vehicle’s value
If the vehicle’s value exceeds what you owe on it, then you may receive a credit when surrendering the vehicle. With most contract hire agreements you will be charged automatically, but we take a more realistic approach and appreciate that sometimes, an early termination can be to everyone’s benefit.
Mileage: another staple feature of many vehicle leasing agreements is restrictions on the mileage allowed and automatic charges for exceeding that restriction. However, with hybrid leasing, because we are using AWLC and therefore have a more accurate handle on a vehicle’s true value, we don’t worry too much about depreciation and how mileage is more traditionally judged to influence that. We believe that mileage restrictions too closely control a customer’s decision-making when discussing leasing deals, so we don’t apply these, or excess mileage charges, in our hybrid leasing agreements.
Vehicle disposal: most leasing companies will send a vehicle out for used car leasing when it comes to the end of its leasing period. Or it can be sent to auction and sold at the highest price. Our hybrid leasing concept takes a little more interest in the disposal of a vehicle, however, because we appreciate that it still holds value, and that value shouldn’t be dismissed. Furthermore, if you as a client have looked after that vehicle, then we believe you should also profit from its disposal. So hybrid leasing looks at each individual vehicle with different criteria and assesses which disposal route will offer the best return. This takes into account the vehicle’s age, mileage, type and condition, and this could lead to a trade sale to vehicle traders or retailers, selling the car ourselves or selling the car internally to our staff. We will share any profits with you, whichever disposal route we choose, with 90% in your favour and 10% to Total Motion.
Hybrid leasing is an innovative way to present information to clients, but we also believe that the flexibility we offer is the best way to offer deals in the modern vehicle industry. People have different demands and they want flexibility, so we believe hybrid leasing offers that, and we achieve it by going the extra mile and offering different solutions from which everyone can benefit. This honest approach, and putting the power back in the client’s hands, is the main reason why hybrid leasing has been developed so widely and why it is an increasingly popular model for vehicle leasing.