Driving Style: Preventing Loss of Residual Value with Real-Time Data

At the heart of the leasing business model, the resale value of the cars must be kept as high as possible at the end of the contract to ensure a comfortable margin. To this end, numerous tools are available to forecast the residual value at 3, 4, or 5 years, allowing the financial outcome of the transaction to be anticipated even before the contract is signed. Conversely, the impact of the lessee’s driving style throughout the contract on the vehicle’s overall condition—and thus on its resale value—should not be underestimated. Increasingly, as cars become more electrified and connected, they are all the more fragile and susceptible to damage from irresponsible driving. How can lessors ensure that their vehicles on the road are used properly throughout the lease term?

Real-time manufacturer data to support eco-driving

There’s no need to wait until the lease ends and the car is returned to take action: the real-time data transmitted by the vehicle to the manufacturer and made available to solution providers makes it possible to monitor and evaluate the driver’s behavior throughout the lease period.

This is where Echoes, a manufacturer-neutral server, can provide a solution to the evolving needs of leaseholders in this area. By gathering technical vehicle data from all manufacturers, Echoes is able to collect and harmonize all this information so that it can be presented in a uniform manner within its dedicated Carlocate and Carfleet interfaces. Among this data, in fact, is a wealth of information that enables the assessment of driver behavior:

First, the average fuel consumption in liters or kWh per 100 km, which Echoes can easily compare to other users with the same profile who drive similar vehicles.
Second, the car’s exact location, which makes it possible to instantly detect instances of off-road use.
Third, monitoring the fuel tank or traction battery level, as well as the history of recharging and refueling, helps ensure that the driver is following best practices in this area.

In the near future, additional real-time data transmitted by the vehicle could help improve monitoring even further. For example, the vehicle’s current speed could potentially be cross-referenced with its GPS location to ensure that speed limits are being observed. The intensity of acceleration and braking could also be calculated to assess the smoothness of driving.

Aggressive driving, reduced residual value

So, how can analyzing this data help preserve residual value? Specifically, there are three major risks facing cars owned by irresponsible drivers:

Aggressive driving inevitably contributes to premature wear and tear on your car: sudden acceleration, abrupt braking, and excessive speeds can place undue stress on brake pads and rotors, shock absorber springs, tires, drive shafts, and suspension arms. According to Bison Futé, eco-driving not only reduces the risk of accidents by an average of 10 to 15%, but also saves several thousand euros over the vehicle’s lifetime, taking into account only tire and brake wear. Similarly, it is not recommended to drive too often with a low fuel level, as this risks the engine ingesting impurities at the bottom of the tank and shortening its lifespan.

Some drivers have no qualms about driving on roads or trails that aren’t suitable for vehicles, using cars that aren’t designed for such use. The result: a risk of damage to the car’s undercarriage—including the chassis side members, suspension arms, and spare tire—as well as the engine compartment or exhaust system. These incidents are all the more complicated for the lessor to manage because they may not be visible during a cursory inspection of the vehicle but can result in malfunctions several months after they occur. This carries the risk of a dispute after the vehicle is resold, along with the potential financial consequences for the operator.
For electric vehicles, the issue of driving habits is even more critical: jerky and overly fast driving will not only lead to premature wear on the suspension and chassis components and reduced battery life, but also carry the risk of having to replace the battery prematurely. Failure to practice eco-driving will also affect the number and frequency of charging sessions, resulting in accelerated wear and tear on charging cables, sockets, and plugs, as well as on onboard electronics and battery control, preconditioning, and thermal management systems. Repairing these parts can cost several thousand euros, and, more importantly, their condition is difficult to assess through a visual inspection upon return. Inspecting them requires the vehicle to be taken out of service and involves the work of a qualified technician equipped with the appropriate testing equipment.

Education before punishment

One crucial question, however, remains unanswered for leasing companies: how can they use this information without violating privacy rights and without giving customers the impression that their freedom of choice is being restricted?

The first approach could involve educational initiatives: providing drivers with resources to raise awareness about eco-driving—such as newsletters, SMS push notifications, and brochures—while informing them of the benefits for their own operating costs.
Second, signing an eco-driving charter could encourage customers to use their vehicles responsibly, especially if such responsible use is rewarded with discounts on their contract or other loyalty incentives.
Finally, as a last resort, monitoring driver behavior may result in penalties, ranging from financial fines to early termination of the contract, if the driving behavior jeopardizes the vehicle’s residual value.

In any case, using a neutral server like Echoes makes it possible to monitor each driver’s behavior in real time, take the necessary steps to correct the situation if needed, and track the effectiveness of those measures once implemented. This could potentially have a positive impact on the residual value of each vehicle.