Writing for Commerce & Industry Magazine, the BVRLA's Andrea McMahon writes about the benefits of vehicle leasing
Whether buying or leasing, choosing a vehicle is a complex business. There is a lot to consider, particularly around affordability, flexibility, suitability, and maintenance costs.
At a time when cash is King, a growing number of individuals and business owners are choosing to keep hold of their money and are opting for ‘usership’ over ‘ownership’, turning to the leasing sector for their next car or van.
The leasing sector has held strong during these challenging times with customer demand remaining buoyant, in pursuit of more flexible vehicle options. The leasing industry body’s recent Business Impact Survey found that 70% of respondents to the BVRLA survey had seen ‘increased demand for more flexible access to vehicles’.
Not only does leasing provide flexibility, it also enables you to keep your cash in the bank and removes risks associated with fluctuating residual values when the vehicle is sold. Who knows what impact the UK’s departure from the EU will have on medium- and longer-term vehicle values? And what about residual values for electric vehicles? These uncertainties are all contributing factors driving the shift towards the less risky option of leasing.
The vehicle leasing sector has not, however, been immune to the impact of the Covid-19 pandemic, and whilst the BVRLA’s latest Quarterly Leasing Survey reported a growth in the number of light commercial vehicles on fleet (up +0.7%), the car leasing fleet was down -5.3% year-on-year.
The fall was largely driven by a -9.3% reduction in business contract hire. Personal contract hire, in contrast, was up (+3.2%) and this growth in demand for PCH looks set to continue.
The BVRLA’s recent Leasing Outlook report predicts that the number of PCH leased vehicles is expected to reach record levels in 2021, accounting for four times more vehicles than four years ago.
The increasing emergence of Clean Air Zones and the merits and limitations of different fuel types are all things to consider when choosing a vehicle and it is not always straightforward. Customers are increasingly turning to the leasing broker sector for expert advice and consultative services.
Leasing companies remain at the forefront of road transport decarbonisation, adapting business models to provide more individuals and businesses with access to affordable low- and zero-emission vehicles. The sector’s green credentials make leasing an attractive option for those living or working in towns and cities introducing Clean Air Zones during 2021 and beyond.
Bath was the first city outside of London to introduce a charging Clean Air Zone (on 15 March), and on 1 June Birmingham followed suit. Bristol, Bradford, Portsmouth, Greater Manchester, Newcastle, Gateshead, North Tyneside, and Oxford are all set to follow, and London is extending its more stringent Ultra-Low Emission Zone by an area 18-times larger than the original Low Emission Zone, by 25 October 2021.
As cities continue to introduce Clean Air Zones, the demand for cleaner vehicles is only going to increase and the leasing sector is perfectly placed to provide affordable flexible CAZ-compliant vehicles to those individuals and businesses looking to switch to cleaner cars and vans.
Of the four million vehicles on the collective BVRLA member fleet, one-fifth have some form of electrification, and the rental and leasing industry has long been recognised as having the cleanest vehicles on the road. Q4-2020 leasing figures showed average CO2 emissions were 98g/km across the BVRLA lease car fleet, compared to the average UK car fleet of 114.2g/km, highlighting the green credentials of the vehicle leasing sector.
Societal changes, where a subscription-based culture is the norm, and environmental considerations, where doing our bit to improve air quality is high on people’s agenda, are but two reasons why the vehicle leasing sector remains strong – and continues to stand ready to meet the needs of individuals and businesses.