Credit crunch hits lease firms
12 June 2008
More evidence that the economic downturn is hitting the fleet market has come with the majority of the top 40 contract hire firms admitting they are already being hit my the credit crunch.
The results come from a survey carried out less than a week ago by a respected fleet consultancy firm. They revealed 95.6% said the credit crunch was having an impact on the industry as a whole with 87% also adding it was having an impact on their business.
Carried out by Colin Tourick & Associates, the survey had responses from 23 of the top 40 lease firms.
"The results are unequivocal but perhaps the most interesting insight came from the additional feedback some respondents provided," said Colin Tourick. "It is clear that different companies are being affected in different ways. Most who commented said that higher interest rates had resulted in higher rentals, and that their customers have not welcomed increased rentals at a time when some are feeling the effects of the economic slowdown. Some respondents said their own funders had reduced their willingness to lend, and that they were reducing new business activity and focusing on the most creditworthy of customers."
This backs Lex boss Jon Waldens comments to BusinessCar that one or two banks may withdraw from the car leasing market in the next couple of years.
Tourick added: "Some respondents said that a general slowdown in the economy is making it harder for them to sell used vehicles as quickly or at the same prices as before. However, many said they still feel optimistic about the medium and long term outlook for their businesses; that they and their parent groups understand that this is a cyclical industry and that it has survived downturns in the economy before and come out even stronger.
"Several respondents said that they see the credit crunch as a good opportunity for them to grow their fleets at a time when others might have to reduce theirs because of funding constraints."