Leasing market shows signs of recovery as decline eases
03 November 2010
The number of vehicles in the leasing sector has fallen by almost 57,000 since 2009, a market reduction of 3.9%, according to BusinessCar's annual BC50 report, which charts the state of the leasing industry.
However, while the industry is still feeling the effects of the recession, this is an improvement on last year, when vehicle numbers fell by 10%.
The top 10 leasing firms showed less turbulence with figures falling by an average 1.9%. While big players such as Lex Autolease and Lombard Vehicle Management continue to drop their fleet sizes, others including ALD Automotive and Volkswagen Group Leasing have made large gains, painting a varied picture in the leasing world.
The overall drop in fleet vehicles unsurprisingly echoes the economy said David Rawlings, fleet expert from Business Car Finance. "There is a lot of functions that aren't being replaced in businesses. And companies are being much harder on car re-allocations as well as extending contracts," he said.
"The client is also being a lot more selective and demanding in the leasing companies they use, moving away from the bigger companies because they are not getting the service they used to get. They are finding they are getting it instead from middle-tier companies.
"There are many firms still looking at the broker market and competitive tendering as an alternative."
Rawlings expects the SME fleet market to grow as more people start their own businesses due to redundancies. But the leasing market is unlikely to improve in the next year: "I think it will be stagnant, but if it's going to move, it will be downwards. That will be for fleets over 100, but smaller fleets, the 10-car firms, will grow."
He concluded: "If I had to advise anybody what to do next year, it would be to work with their clients, whether that's reallocating vehicles, use of short-term vehicles or general advice on fleet policies."
BVRLA boss John Lewis said funding issues were "partly to blame for the turbulent scenes in the leasing broker market in late 2009 as some of the leasing companies working with introducers reduced their exposure or pulled out entirely".
He added that while there may be some major acquisitions over the next 12 months, these are more like to be caused by "strategic decision-making rather than economic necessity". "With the CBI forecasting a slow recovery and not a double-dip recession, there will be few bargains out there," said Lewis.
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