THE retail leasing sector is booming, and there are signs that the fleet sector is coming back to life, explained Spencer Blake, sales director of Wessex Fleet Solutions, on the BVRLA’s latest Industry Outlook seminar today (16 March 2021).
Entitled Industry Outlook – a spotlight on the challenges of the pandemic and hosted by the BVRLA’s head of policy and public affairs Thomas McLennan (top left in picture), Blake took part in a panel discussion that included Stuart Russell of Europcar (top right) and Mark Evans of ALD Automotive (bottom left).
Blake explained that during the past 12 months there had been a divide between the retail side of its business and the fleet management of corporate clients.
“In terms of fleet, we saw some long term planning by companies, with some sending vehicles back early, while others extended the rental period. We also ordered a lot of long term rental as fleets looked for more flexibility.
“As for retail it’s been strong and has kept on accelerating. This January, which is not typically a busy month for us, we ended up with the best ever order take in 15 years of trading.
“I think, like the rest of our broker colleagues, that’s because we have been online for so long, we’re ahead of the curve in terms of the increasing interest in digital sales.”
In the business space there has been demand for premium electric cars, with owner-directors looking into EVs for their tax advantages. The more retail oriented side has been slower but we expect it to grow as more affordable product comes to market.
Spencer Blake, Wessex Fleet
Blake predicted that 2021 would continue as a strong year for brokers, with retail continuing to surge forward and, with a pathway out of lockdown, there were “green shoots appearing” for the fleet side of business.
“The traditional core fleet has gone to zoom, but there will be a need to get back,” added Blake. “There is some concern that the longer home working goes on the greater strain that puts on employees. It can also have an effect on the company culture. So that will bring us challenges going forward; but we see a more hybrid version in the future for meetings.”
Headwinds of vehicle supply and underwriting
However, the Wessex Fleet sales director did point out that there were headwinds which could affect the way 2021 pans out, in particular vehicle supply was a concern.
Blake said this was partly to do with the impact of COVID-19 on all areas of industrial production, from the vehicle factory to the semi-conductor producers.
“We’re certainly seeing waiting times getting pushed out. There is a possibility that – as the UK is proving a strong vehicle market – we could see some European market allocation being redirected to the UK which would bring down waiting lists. Nevertheless, delivery continues to be a moving feast and relating those messages to customers is key.”
The other issue affecting broker growth in 2021 is the speed and accuracy of underwriting by the vehicle funders.
Blake explained that there were two pressures affecting underwriting.
“First, each of the funder partners we work with are all working remotely, and that creates certain pressures. The second is that trying to underwrite a business or person that has been hit by COVID and assessing their financial viability is becoming more difficult than ever.
“For a large swathe of the population it’s not easy to digitally verify their financial position; their income may be based on bonus, or they are self employed. It’s easy to underwrite those that have been in a steady job for years. But the UK is changing and many people have incomes that don’t conform to that sort of underwriting. So establishing effective underwriting criteria is more difficult.”
CV sector growing
Stuart Russell from Europcar, who shared the panel, reported that there had been big demand for vans from the back end of 2020. “Those vans that went out at Christmas for the usual boom we expect at that time of year simply haven’t come back as online deliveries become more established in the UK economy,” he said, but added that “cars were stagnant”.
Corporate rental lengths changing
ALD’s Mark Evans said that the leasing provider had witnessed a reduction in lease lifecycles down to two or three years with a view to changing powertrains to electric at a later date.
“Flexibility is becoming important for powertrain moves as fleets begin to test the water for electric,” he added.
Catch up on Spencer Blake in the webinar
The BVRLA is providing recordings of the Industry Outlook webinars on its website. You can replay the webinar at the BVRLA’s Industry Outlook website page.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
