Extensions heading back to normal
14 February 2011
The proportion of leased vehicles on contract extensions has almost returned to pre-recession levels, according to research from fleet management expert Professor Colin Tourick of Aisby & Co.
Prof Tourick received survey responses from 14 of the top 25 leasing firms, compiling data from companies that control 67% of the vehicles in that sector.
At its peak, the proportion of vehicles going into extension during the recession was 27.2% compared with 18.3% before the recession. The number is now back to 20.6%. LCVs were significantly higher than cars in all circumstances, with 42.9% of vehicles on extension during the recession.
The average length of extensions was also up, going from a pre-recession 6.6 months to a peak of 8.9 months before coming back slightly to the current level of 7.5 months. LCV extensions were significantly longer than cars before the recession at 8.1 months versus 6.1 months, but car extensions are actually higher now at 7.6 against a van's 7.2 months.
Rather than extensions, Prof Tourick's research found that more business is now being written over four years - 26.0% against 22.2% three years ago, but three-year contracts have also risen slightly over the same period at the expense of two-year deals. Among LCVs, almost half are on four-year contracts, and 12.5% are even up to five-year deals.
There have been small-scale rises across the board in early terminations, while the number of vehicles incurring damage recharges has risen from 48.3% three years ago over the halfway point to its current level of 53.2%.
Prof Tourick named RVs as one of 2011's key challenges. "Over the next three or four years there are a wide range of opinions from contract hire companies," he said. "RVs are being set all over the place - there's a huge divergence of opinion as to what these cars will be worth in three years' time."
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