15 Oct Network Rebates: The Hidden Profits Inside Fleet Maintenance
At first glance, fixed-cost maintenance and repair packages look like a risk-free way to manage fleet costs. But buried in these arrangements are network rebates, discounts that suppliers negotiate with service providers.
The issue? Unless explicitly covered in your contract, these rebates rarely make their way back to the client. Instead, they become a hidden source of supplier profit, built on the back of inflated or conservative budget assumptions.
Why It Matters
- Surpluses created – Maintenance budgets are often set conservatively, leaving room for supplier gain.
- Supplier advantage – Unless contracts demand transparency, rebates are kept by the lessor.
- Masked true costs – Surpluses hide the real cost of maintenance delivery, obscuring procurement’s visibility.
The Risk for Procurement Leaders
If budgets are calculated pre-rebate, clients may unknowingly fund inflated reserves. Over time, these surpluses grow, and procurement is left with a false sense of security that costs are under control. In reality, value is leaking directly into supplier margins.
What To Do Instead
- Clarify budget calculations – Ensure you know whether budgets are pre- or post-rebate.
- Define surplus-sharing – Build mechanisms into contracts to ensure clients share in the upside.
- Demand granular reporting – Insist on transparency by vehicle or segment to spot anomalies.
Rebates should benefit the organisation funding the fleet, not quietly boost supplier profitability. Procurement must assert control.
Our ebook, Control the Contract, Control the Cost, provides detailed strategies for closing this trapdoor and five others.
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