Fleets remain wary of the possibility of economic and company car market headwinds in 2020 despite the additional certainty provided by the General Election result.
That’s according to Meridian Vehicle Solutions Managing Director Phil Jerome, who says that the medium term rental product that his company provides gave a useful insight into the mindset of businesses at this time and that, while confidence had improved, there were still reservations.
“Over the last few years, with all the uncertainty that surrounded the Brexit process, we have seen many businesses use medium term rental because, at least in part, they wanted to put off making a decision on long terms lease until things felt more stable,” said Jerome.
“While it is still early days, I think it is possible to detect a slight change of mood. Whether people liked the election result or not, it has removed a degree of that uncertainty.
“However, there remains quite a lot to be concerned about. At a macro level, economic growth is likely to remain sluggish and the Brexit trade deal negotiations are only just beginning. Within our sector, there is change in the shape of the development of the EV market and the continuing displacement of diesel – alongside uncertainty resulting from not knowing what will happen with company car taxation, with even the forthcoming rates not yet passed into law.
“For that reason, we do not expect to see any kind of unleashing of market demand and a flood of new, longer term leases signed. People are feeling happier but far from secure.”
Jerome added that one of the trends that Meridian had noticed in recent years was that, once they had embarked on a cycle of swapping their cars on a 6-12 month basis using medium term rental, they were largely content to continue.
“The fact is that the rental rates that we provide are simply not that much more expensive than conventional 3-4 year leases. Initially, customers often seem to feel that the idea of swapping your car much more regularly is perhaps somehow frivolous but that passes, simply because it makes sense for them in terms of cost and commitment,” says Jerome.
“Our feeling is that, for the customers who are using medium term rental as a means to defer long-term obligations, it will take a fairly decisive move towards greater economic and market certainty before they look again at longer-term leases.”