Industry Insight
Leasing brokers: driving the shift to vehicle usership Is car ownership on its way out?
Andrea Davies British Vehicle Rental & Leasing Association (BVRLA)
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he shift from vehicle ownership to usership continues to pick up pace as an increasing number of businesses and individuals opt to lease or rent vehicles rather than buy outright. There are many reasons for this shift. Economic uncertainty has instilled a reluctance to make large investments as people choose to keep cash ‘behind the clock’ should cashflow get tight or key investments be needed elsewhere. Leasing a vehicle not only enables customers to keep more cash in the bank, it also removes risks associated with fluctuating residual values when the vehicle is sold. Who knows what impact Brexit will have on vehicle values if World Trade Organisation tariffs get applied? And what about residual values for electric vehicles? These uncertainties are all contributing factors driving the shift towards the less risky option of leasing, and brokers are at the forefront of this market growth. The BVRLA’s most recent Leasing Broker Survey showed that the combined leasing broker car and van fleet grew by 10% in 2018, with a similar 10% growth in new business. Long established at dealing in the business-to-business space, leasing brokers are increasingly dealing with individual customers and are adapting their business models to suit. According to recent BVRLA leasing broker funder 38 | NACFB
data, the proportion of personal contract hire (PCH) cars on contract has risen from 26% in 2013 to 57% at the end of 2018. 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, and customers are increasingly looking to the leasing broker community for expert advice and consultative services. The impending arrival of Clean Air Zones and the merits and limitations of different fuel types are all things to consider when choosing a vehicle and it’s not always straightforward. Despite the negative ‘dirty diesel’ headlines, diesel is still likely to be the best option for those making regular long journeys or carrying heavy payloads. As it stands today, there is no suitable alternative to diesel for many commercial vehicle applications.
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Although it still has its place, we continue to see a downward trend
Leasing a vehicle not only enables customers to keep more cash in the bank, it also removes risks associated with fluctuating residual values when the vehicle is sold