CEFC gives government’s Green Fleet a $50mil boost

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Government fleet managers across Australia will soon get access to significantly cheaper low emissions vehicles after the federal government’s Clean Energy Finance Corporation (CEFC) inked a $50 million deal with ASX-listed independent vehicle leasing company Eclipx.

The landmark transaction will give public sector, not for profit and corporate car fleet buyers “favourable loan interest rates” when leasing low emission passenger and light commercial vehicles.

The use of what are effectively subsidised interest rates for ‘green fleet’ purchasing is a major development for government procurement managers who have previously been forced into a trade-off between preferable lower emissions vehicles and strict value for money value purchasing criteria.

The CEFC says it is backing the new product because vehicles account for around 10 per cent of Australia’s total emissions.

“This is clearly an area where we need to take action, and by focusing on fleet buyers we are hoping to see an accelerated uptake of low emissions vehicles,” said CEFC chief executive Oliver Yates, adding the transaction is deliberately intended to encourage fleet buyers to select more efficient vehicles.

“More efficient fleets will reduce emissions as well as reduce operating costs, achieving productivity and environmental gains,” Mr Yates said.

One inhibitor to greater take-up of low emissions vehicles within government has been that lower volumes of sales for car makers make it harder for them to offer government the kinds of volumetric discounts that might otherwise be achieved for higher emitting vehicles.

The new facility from Eclipx goes some way to addressing that challenge because the company can use the $50 million on the table to help aggregate sales for eligible vehicles.

It is understood that the Hyundai i20, Nissan Navarra diesel and the well-established Toyota Prius hybrid are among the models government customers will be able to choose from.

With $1.7 billion worth of fleet assets under its management, Eclipx Group is certainly no minnow when it comes to the Australian fleet market, running the Fleet Partners, Fleet Choice and Fleet Plus brands under its umbrella.

“Eclipx is committed to supporting the reduction of carbon emissions through the increased use of energy efficient vehicles,” Eclipx chief executive said Doc Klotz said.

“Many of our customers, including publicly-listed companies, government and not-for-profit entities, are acutely aware and concerned about reducing their carbon footprint.

“With this new CEFC funding facility, Eclipx can help fleet buyers reduce their carbon footprint and at the same time lower their overall lease costs.”

Industry group the Australian Fleet Lessors Association estimates that there are around 450,000 vehicles under management by its members in Australia   a sector the CEFC has made clear that it wants to greater take-up of low emissions vehicles in.

Despite low interest rates, fleet leasing has been enjoying a comeback in the public sector more recently. In 2014 the NSW government revealed its intention to shifting from buying vehicles as a capital asset to leasing as a service to put its balance sheet to work.

Those savings materialised this year after NSW Finance, Services and Property Minister Dominic revealed the state will save a whopping $1 billion.

The federal government is also expected to overhaul its centralised vehicle procurement policy and remove the so-called Buy Australian mandate as manufacturers Ford, Holden and Toyota all gradually shut down their factories here.

Whether or not Canberra it moves from buying cars outright to leasing remains to be seen, but the CEFC clearly wants more leasing companies to step-up on reducing emissions.

“The size of the fleet means that Australian fleet buyers and lessees can play a key role in increasing the proportion of low emissions vehicles on our roads and the adoption of new solutions like electric and fuel cell vehicles,” Mr Yates said.

“We hope that this initial transaction will establish a closer working relationship with fleet operators. That way we can work to achieve even more ambitious outcomes in the near future.”

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