FOR business owners today — both large and small — having cars, vans and trucks is recognized as a necessity. However, so many questions arise and the choice of which is better —should you own or rent a vehicle for business use? Is your vehicle fleet growing in size and finding resources internally is challenging? Dealing with LTO (Land Transportation Office)-related concerns, insurance coverage and even scheduling downtime for preventive maintenance?
These are considerations that are typically viewed as noncore activities for most businesses and more so for MSMEs (micro, small, medium enterprises) on a tight budget. The dilemma is genuine considering the myriad of choices available and need to be compliant in the event of an accident. More so as the reputation of your business can also be at stake.
If this is the case, then the idea of renting a vehicle via an operating lease bundled with fleet services included in the monthly rental fee may be a viable solution worth considering. Not only reducing upfront cash flow to acquire a vehicle and spreading payments over say 36-60 months but also with preventive maintenance and insurance costs built in during the term of the lease.
Or how about taking the family or guests out for the weekend but the requirement is for an SUV or luxury van? Need a short-term replacement vehicle? Are you traveling on a business trip to Cebu and prefer to have your own vehicle with a contracted driver? Fancy trying out an electric vehicle for more than just a 10-minute test drive to see if this makes sense to own?
Short-term rentals of a fully LTO compliant, all accident insured and well-maintained driver driven vehicle for a day or even a week from a reputable car rental company would make sense in these cases.
In addition, as a busy small or micro business owner — how do you find time to sell or dispose of your vehicle? This is a very real struggle and hassle for many in finding genuine buyers and securing the transaction safely, especially if posting opportunistically via social media channels. Once buyers are found the next concern is being able to sell the vehicle at a fair price and not be at the mercy of seasoned low ballers or being forced to sell quickly as the process is too burdensome and time-consuming.
Finding a service provider that can help to professionally manage the sale of pre-owned vehicles at fair resale values via auction bidding may be the solution to this dilemma. Although not normally practiced in the Philippines, auction selling is common practice in Japan as it ensures transparency and fair market value pricing from potential buyers who are vetted beforehand.
On the other hand, if your business is looking for a secondhand vehicle or fleet of vehicles in good condition, then it may be good to check that your preferred dealer also has its own in-house garage/repair shop so buyers can be assured that vehicles are checked by qualified auto specialists. Knowing the source of where vehicles being sold are from is also helpful.
On average, ex-leased units from corporates and multinational companies make very good secondhand buys as normally these vehicles are maintained better as they will have closely followed the manufacturer preventive maintenance service schedules from the “casa” or recognized garages/repair shops.
Ron Arambulo is a senior vice president and CFO of BPI Tokyo Century Group (BPITC). BPITC is a joint venture between Japanese lease financing group Tokyo Century Corp. and Ayala-led Bank of the Philippine Islands. BPITC is proud to be a member of the Philippine Finance Association.
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