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Leasing at the crossroads

Posted on by St John

Leasing at the crossroads

St John White, head of Prova’s transport team, thinks the UK leasing industry is fast approaching an important fork in the road…

When I began in public relations back in the 80s, one of my very first clients was a car leasing firm – which has now been subsumed into a major bank brand.

Over the years, models changed, tax regimes altered and funding mechanisms evolved, but by and large the contract hire business could rely on a stable, largely predicable market.

That is all about to change.

Having had a ringside seat of the industry for over 20 years, it has given me a special vista of the UK contract hire sector.

And I really think the next few years could see a seismic shift in the business, which will increasingly see a two tier structure consisting of a ‘premier’ and ‘first’ league of ‘mobility’ providers to employers.

Driving this change, I believe, are two big factors; technology and our increasingly stressed transport infrastructure.

First, technology is affecting how leasing firms operate in a number of ways.

As organisations that live and die on the quality of service offered to company car drivers, elements like digital media and the power of the consumer will increasingly drive leasing firms to offer excellence.

That vital link between the driver/fleet manager and the provider of their vehicle is still not really understood by many leasing firms in tangible terms.

As an example of bet practice here, look at retailers such a Sainsbury’s, who have used social media channels to create a direct line of communication with customers. This approach is sure to grow in importance in the fleet customer / service provider paradigm.

Secondly, our creaking transport infrastructure – be it road, rail, air or sea – is unlikely to get less congested, less expensive or less unreliable unless significant changes happen to the government’s spending plans.

For enlightened leasing firms, this major structural challenge also provides business opportunity.

This is where I believe a two tiered industry may soon emerge, between those firms that offer a ‘standard’ vehicle leasing solution and those that provide a far wider, more consultative service.

While the former will continue to provide ‘metal and wheels’ via contract hire, the latter will develop a far richer array of services including flexible EV use, train/air travel, hotel bookings and event virtual conferencing services.

While international leasing providers such as LeasePlan and Alphabet, which are owned by car giants Volkswagen and BMW respectively, are already developing a range of mobility services for the corporate market, smaller players are focusing on the basics of pushing down monthly rentals and maximising residual values.

Looking ahead, there’s a definite fork in the leasing road. Leasing providers that have not yet made clear decisions on their direction of travel, and their marketing strategy to communicate this important repositioning, need to act quickly or be overtaken by events.

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