‘End of the road’ for traditional leasing agreements
Increasing fleet requirements for more flexible vehicle supply could spell the end of the 36 and 48-month traditional vehicle leasing agreement.
That’s the view of Tony Donnelly, chief executive of Goodwood Corporate Mobility, parent company of both GoodLease and Goodwood Rental, who says that many millennials moving into management positions do not have the same attachment to company cars as older employees – they simply want mobility when needed.
Donnelly also pointed to other evolutions in the fleet industry, including a lack of clarity on company car Benefit-in-Kind tax rates beyond the 2020/21 financial year and disruption from the introduction of WLTP that had seen operates realise they can hire quality cars for periods of up to 12 months and sometimes longer on the same terms (price) as they can get a 36/48-month lease.
Other benefits include not being tied into a lengthy three or four-year contract and not risking potentially exorbitant end-of-contract charges.
Donnelly continued: “At a time when many businesses are shrouded in Brexit uncertainty, committing to long-term three and four-year leases is seen as an unnecessary risk and shorter-term rentals limit corporate and fleet exposure.”
Donnelly said the industry had seen traditional contract hire and leasing companies move towards shorter-term rental, while the traditional international short-term rental companies have tried to adapt their models, but he added there still remains a degree of inconvenience to that solution in the form of the funding terms/buy-back arrangements with vehicle manufacturers that can see vehicles recalled, providing admin issues for operators.
He also claimed: “Business is flourishing in the short and mid-term rental market because fleets do not want to be at the mercy of one vehicle provider – long-term leasing company or international rental company – amid a desire for increasing vehicle flexibility.”