BC50 2014 results
28 October 2014
Thanks, in part, to an economy returning to full health, the leasing industry has this year surpassed the strong growth that was recorded in 2013.
The past 12 months have seen the leasing industry go from strength to strength as it followed up a good 2013.
According to BusinessCar's BC50 figures, 2014 outpaced the previous year's growth of 5.6%, with fleet sizes growing by approximately 7.5%.
The rise is in line with the Society of Motor Manufacturers and Traders' figures for fleet car registrations, which are up 7.4% year-to-date. Some of the increase can be attributed to the UK's growing economy, with businesses coming back into the market to replace their light commercial vehicles, with total registrations for cars up 9.1% and vans up 18.1% year-to-date, according to the SMMT.
Andrew Hogsden, senior manager in strategic fleet consultancy at market leader Lex Autolease, says the strength of growth the company has seen over the past year is positive, but brings with it new challenges.
Hogsden explains: "Increased business and consumer confidence has led to a tightening of the labour market, with employers more aware than ever of the need to offer a competitive compensation and benefits package.
"In response to this, our salary sacrifice schemes have been a major area of focus."
Leaseplan has also seen a surge of interest in salary sacrifice schemes over the past year. Stuart Walker, the company's ancillary sales and strategic marketing director, says: "Large clients are now requesting [salary sacrifice], and when we introduced it in 2008 we were looking at a very different market, where the economy wasn't as strong as it is now.
"As the economy continues to strengthen, the popularity of salary sacrifice schemes has been growing with the increase in job security."
Benoit Dilly, Arval managing director, says the growth his company has seen in 2014 is no surprise because due to the increase in business optimism.
He says: "An increasing number of companies in the UK expect their fleet to grow, which has been reinforced in our business performance in the past 12 months.
"The economic downturn has left a legacy, as the majority of companies retain a heavy focus on cost management. For fleets, a whole-life cost approach remains the right one for any business looking to make the most cost-effective vehicle choices."
The other significant area of growth for the major players has also come as a result of the stronger UK economy, with more businesses looking to replace their light commercial vehicles.
Lex launched its Driveaway offer for light vans this year, which offers tradesmen ready-to-go vehicles specifically fitted out for plumbers, joiners, electricians or construction workers.
Leaseplan has also seen growth from LCVs, particularly with customers using contract hire as a funding method.
Over the next year, Hogsden expects the needs of its fleet customers to become increasingly complex as the economy continues to grow.
"The industry will need to respond to this by offering a broader range of products and services that support customers in a way that is individually tailored to them," he says.
"As ever, account management and information that enables customers to manage their fleets in the most effective way will be crucial."
Dilly believes more businesses are focussing on ultra low-emitting vehicles as part of their fleet mix as manufacturers continue to deliver a wide range of options to suit fleets' financial needs, as well as those of their drivers.
There's a consensus among the top leasing players that the pace at which technology is used to monitor, manage and track drivers and fleets will continue to increase over the next 12 months.
Walker says the industry is investing heavily in digital processes for fleet management, but the challenge will be offering something unique and continuing to innovate in a crowded market.
There is now a greater need to access information remotely, with fleet managers able to manage their cars and vans on the fly with smartphone- and tablet-compatible apps. Fleets are moving away from paper-based techniques to record mileage and gain access to information on their smartphones.
Dilly says: "Some things haven't changed though - our customers continue to expect good value, ongoing support and great service from us, and we have remained really focused in these areas through the way that we structure our business, our processes, new products and services, and most importantly through the approach of our people."
One of the biggest challenges facing the industry next year will be the impact of continued growth from new vehicle registrations. It will mean a flood of stock on the used car market in the following years to come, which could have a negative impact on values as buyers are spoilt for choice at auction.
- Click on the next page to view the full BC50 2014 table