Personal Contract Hire (PCH) has recently proven to be a very effective solution for small companies in need of vehicles for a definite period of time (despite being primarily addressed to private users); for example, when seasonality comes into play and companies face busier days and are not willing or not able to cope with a vehicle purchase or with business contract leasing due to lack of funds, longer contracts, higher responsibilities or just in order to follow a strategy which uses funds differently.
There is no right or wrong answer to the question as to whether companies should use PCH or leasing instead of acquiring new vehicles, as it rather depends on the activity, seasonality and objectives of a specific business: sometimes PCH or traditional business leasing could be the perfect answer to their requirements, but maybe not so much on other occasions. It might also depend on the type of vehicle a particular business might be looking for, as the choice is usually limited and more focused on cars or vans rather than on construction vehicles, for example. But it seems that Personal Contract Hire or PCH is actually a good solution for some companies whose business depends on driving, as the trend towards this option is increasing. According to the British Vehicle Rental and Leasing Association (BVRLA), the trade body for the vehicle rental and leasing sector, the trend towards PCH has grown steadily for both vans and cars in the period from 2012 to 2015, and grew by 14% in the first quarter of 2018. PCH seems no longer to be a prerogative of personal use, as more and more businesses start to turn towards it, though it certainly has some downsides.
With the general tendency for businesses toward vehicle sharing for their driving needs, PCH might actually be capable of accommodating changing requirements, as, according to some experts, vehicle ownership will definitely decrease in the future. But when we consider the increasing demand for leased vehicles, there are still lots of factors we need to look at. Compliance and maintenance seem to be the two aspects most fleets would rather not think about: but it is actually a fact that having a similar type of contract to the more traditional arrangements might lead to a clash of responsibilities and maybe to drivers not taking the appropriate care of maintenance, since around 20% of the PCH agreements, for example, do not include maintenance expenses according to research recently carried out by Epyx, a technology solution provider.
This might lead to some obvious problems, because if the company providing the PCH agreement is not taking care of maintenance, it creates some uncertainty upon the status of the vehicles and what their remarketing value will be when it comes to the end of the contract. Employers adopting PCH agreements as part of their fleets will use those vehicles for business, but will struggle to find out if they are actually maintained according to the necessary standards and if they meet compliance requirements. The employer is usually responsible for the duty of care obligations, so how could companies avoid an information deficit and find a way to implement sound maintenance practices so that the PCH provider, the company and the driver share the same information?
Having an independent maintenance system that could be checked by all parties is definitely a sound means of preventing possible miscommunication between all those parties. If you wish to know how this could be done, check out our SynX Maintain option.