AS we prepare to park 2020 behind its COVID-19 face mask, it’s worth reflecting on some of the major trends in the leasing broker sector.
Many of the changes were accelerated by the impact of coronavirus – in similar fashion to the way coronavirus accelerated trends already evident in society as a whole – such as the focus on improved digitisation, and the continuing growth of the larger leasing brokers.
And while 2020 has been an horrendous year to navigate, the outcomes have generally been positive. So let’s have a look at some of the key themes and trends of the leasing broker sector in 2020.
Optimism bookends 2020
At the start of the year there was a tremendous surge of optimism among leasing brokers that 2020 was going to be a terrific year for growth, pumped up on a head of steam generated in 2019.
There were office moves designed to harness and fuel this expected surge in sales, such as family firm Gateway2Lease moving to larger premises in the West Midlands.
While, in a different direction, Harrogate broker Synergy Car Leasing sold a majority stake in its business to Newable, MD Paul Parkinson remarking that:
I see so much opportunity in this sector – from helping customers transition to electric vehicles to supporting more SME business customers. We are delighted to be working with Newable, a business that shares our ambitions for growth with the resources and support to help us deliver on these in a dynamic change driven marketplace.
But it wasn’t all about being new; the long game and learning to adapt played its part, too, as witnessed by Balgores.
Balgores celebrates 30 years
Essex-based broker Balgores Leasing hit 30 years at the start of the year. Boss Martin Wilson (left) said such longevity was down to treating staff well and embracing new technology.
Of course, the COVID-19 pandemic rapidly undid this optimism in March. Dealer-locked cars, unable to be distributed thanks to the lockdown, caused havoc for all those end of financial year vehicles so carefully crafted by brokers and funders alike, which unravelled mercilessly as new WLTP and new company car taxation rules changed the financials post 31 March 2020.
If the market changed rapidly at the end of Q1, one thing that has been clear throughout has been the level of communication from the BVRLA. The association has been steadfastly helped brokers with advice and information, along with other BVRLA members, through the lockdown and coronavirus pandemic, but also through the final wranglings of the EU deal.
Commenting on the last gasp UK/EU agreement, BVRLA chief executive Gerry Keaney said:
This Brexit trade deal comes as a big relief and will provide a welcome boost for the UK automotive sector, which can now plan for 2021 and beyond with more confidence and certainty. Avoiding tariffs on vehicles and parts is essential, but with the end of the transition period only days away, there is a lot to be done to prepare for January and beyond as details around the new trading terms become clear.
Most viewed story on Broker News in 2020
After the Home Page, the most visited story on Broker News by some margin was this welcome advice from the BVRLA. Toby Poston felt some heat on LinkedIn for this view, at a time admittedly of heightened opinions, but it turned out to be not only COVID-secure advice, but started to unlock the logistics of car deliveries in the UK. Even if brokers did have to pick up the pieces afterwards…
What remained remarkable was that, despite these setbacks, brokers continued to trade, and went on to trade successfully at often record levels. For example, Silverstone Fleet Management became a LeasePlan Platinum partner for the first time at the end of the year.
MD Scott Norville, commented:
To have been granted LeasePlan Platinum Partner status on the back of the high volume of vehicles we have leased during the past 12 months would have been incredible in any year. However, to have achieved this during a worldwide pandemic – and all the challenges that came with that – is nothing short of astounding.
It was a remarkable feat. Rather like Select Car Leasing being named the Platinum Partner of the Year for the second year in succession. Such stories, along with Fleet Procure registering 50 broker partners on its procurement platform – double its target for the year – are good news stories to bookend a horrendously hard year, and suggest that 2021 will be another success story for leasing brokers as optimism continues to abound.
COVID continues to accelerate big broker growth
The expansion of bigger brokers was a feature that COVID-19 accelerated, but rather than turning to acquisitions, in the main the larger brokers grew by taking on Appointed Representatives (ARs). Bridle Vehicle Leasing, Fleet Alliance and Select Car Leasing were notably active in this area during 2020.
The first major announcement of the year was established Preston broker Cameron Clarke Leasing becoming an AR of Select Car Leasing.
Another established brokerage to take the AR route was Anthony K Associates, which became a Fleet Alliance AR, part of the Glasgow broker’s aim to recruit business contract hire specialists.
The Bridle Group also began a major AR programme at the beginning of the year in contrast to the Group’s acquisition policy, but still managed to find time to purchase personal leasing experts Kew Vehicle Leasing.
For many brokers, the possibilities offered by an established AR programme – access to bigger buying power, a greater group of funders, and the passing over of back office administration – were the big attractions. For the larger brokers, the drivers have been growing market share and what that brings to the brokerage in terms of fleet size and buying power.
Taxation changes – unregulated business to grow?
Significant changes were introduced from 06 April 2020 regarding the benefit in kind taxation of company cars. These were further accelerated by the government’s announcement that it would ban the sale of petrol and diesel vehicles from 2030 as part of its decarbonisation plans.
In particular it shines the spotlight on businesses and fleets to adopt zero emission vehicles, or ultra low emission PHEVs, not only for the positive impact on local air quality but the uptick on the bottom line in terms of running costs and driver benefit in kind.
We’ve highlighted some of the trends using Gensen software in our series of features each month, in particular ICE versus EV: the business case for fleets to change. Indeed, fleet management has become a focus for many brokers as they look for a broader range of services to provide clients, such as Concept Vehicle Leasing and Rivervale Leasing who both adopted the ODO fleet management platform.
Burton-on-Trent broker, CBVC Vehicle Management, managed to secure the services of former ARI Fleet and ALD Automotive boss, Keith Allen, to write a White Paper on the benefits of multi-bid acquisition with an emphasis on business contract hire and fleet management.
Naturally DriveElectric, the Marlow-based EV specialist broker, has been at the forefront of most projects to demonstrate the qualities of EVs, and also launched a flexible EV rental product to enable firms to take a ‘try before you buy’ approach.
While brokers have been in the forefront of BVRLA fleet growth, thanks in the main to PCH volume, the change in taxation policy is likely to see a move back towards business contract hire over 2021 – provided enough electric vehicles are available, of course.
Changes to cap terms
The last quarter of the year has seen the digital marketing of brokers put under the microscope with cap announcing that only those brokers and marketing platforms holding a valid Broker Communication Licence would be able to use cap data and ID from end 2020.
In particular that put users of non-cap compliant Calas software in the position of being unable to advertise lease deals on two of the biggest marketing platforms – Carwow and Leasing.com. Alternatively, they could swap to cap compliant website providers, such as Automotus, to continue their marketing schedules in time for the deadline. The race to meet the end December date has put pressure on suppliers and brokers alike and will continue to be a feature in the early part of January.
And so into 2021
So here we are on the cusp of a new year. With much of the UK still in the grip of the pandemic that has blighted the past year, brokers have shown their ability to move quickly to accommodate trading positions and to continue providing outstanding service and leasing offers in association with funders such as Hitachi Capital Vehicle Solutions and Leasys, both partners of Broker News.
While we can expect the themes explored during this review to continue, particularly the growth of EV deals and fleet management provided by leasing brokers, we can also expect regulation to come back into focus, particularly around the SM&CR rules. Brokers have had much to contend with over 2020, but FCA regulation should not be overlooked.
There remains some anxiety over vehicle availability and we have yet to fully understand the implications and changes brought about by the newly-stamped Brexit trading deal with the EU.
But I suspect the rise of the leasing broker sector will continue its upward trajectory, showing the same resilience, fortitude, entrepreneurship and nimble footed adaptability as we have witnessed in 2020.