The business climate in 2014…
‘There are clear signs that economic recovery is taking place in a number of business sectors, but at the same time employers remain fully focused on cost reduction. That will continue to have a twin impact in the fleet arena.
‘The Government’s failure to significantly reform business rates and, it would appear, the banks continuing to have a tight grip on small business lending, means that any reversal in the fortunes of high streets nationwide is unlikely.’
Peter Lambert, fleet director, Kwik Fit
‘Economic indicators such as PMI and the Lloyds Bank Business Barometer suggest that companies are benefiting from stronger domestic spending patterns and a steady rise in new orders. After several years of caution, the signs are that businesses are beginning to feel more confident and optimistic about their future trading prospects.’
Tim Porter, managing director, Lex Autolease
‘With three quarters’ consecutive GDP growth in 2013, policymakers will be eager to maintain recovery momentum. The Bank of England’s recent announcement that the base rate is likely to remain at 0.5% until unemployment dips below 7% means stable interest rates and lending conditions are likely for at least the first half of 2014. A growing UK car market bucked the wider European trend of decline in 2013, and we expect moderate growth to continue next year.’
Darren Payne, sales director, Renault
‘We saw increased levels of fleet outsourcing in 2013 from companies concerned about their net profitability and focused on cutting costs to improve the efficiency of their businesses.
'We do not expect that to change in 2014, despite a more upbeat economic outlook.’
Rob Wentworth-James, head of sales and marketing, CLM
‘There will be some changes in the minutiae that make-up the wider economic picture, but overall we anticipate a slightly better year for business and consumers with London and the south east continuing to lead the recovery although by the end of 2014 all regions should return to positive growth.
‘The number of people claiming unemployment benefit will further reduce, as will inflation thus taking pressure off salary increase demands.
‘However, further public sector cutbacks will bite thus offsetting improvements in the private sector. Consequently, we predict the economy growing only a fraction.
‘Although the bank base rate may not change, we anticipate long-term interest rates creeping up towards the end of the year and the Eurozone will continue to trail the UK in terms of economic growth.’
Vincent St Claire, commercial director, Fleet Assist
‘Inflation in 2014 will likely hold steady but higher registrations as the economic recovery continues could impact RVs in three years’ time as there could be an oversupply of vehicles if demand isn’t matched.
‘Interest rates will probably rise and this may bring an element of volatility into the economy for budget planners. The economy has enjoyed relative stability in terms of budgets and interest rates recently but over the next couple of years leasing companies will have to react to raised interest rates and customers will need to adjust budgets accordingly.
Mike Belcher, head of sales, Hitachi Capital Car Solutions
‘Who knows what will happen next year but whatever it is, it won’t mean that the end of the world is nigh!
‘The smallest of unforeseen circumstances can affect confidence in the economy, who could have predicted the recent problems with the Co-op Bank, for instance? In my experience, after a relatively short period of time everything settles down and then normal service is resumed.
‘However, it would be great if we could have the equivalent of traffic calming in the business world – this would stop everyone getting too close and causing a pileup when the person in the front of the queue jams on their brakes, which is effectively what happens with consumer confidence.’
Martin Evans, managing director, Jaama
‘I see a continued slow recovery through 2014 although maybe the housing sector will pick up more quickly due to the incentives being offered by the Government, and also the demand for housing. There will be pressure to increase interest rates, but I suspect these will remain static or only move marginally.
‘With increased confidence in the economy new and used car sales will improve particularly as we are now starting to see more used fleet stock with low emissions entering the second hand market. However, fuel prices remain the big unknown as they are so dependent on the situation in the Middle East.’
Damian James, chairman, ACFO
In many respects, everything and nothing has changed; by this I mean that the UK economy is clearly recovering although long-term structural challenges remain. The Bank of England has now pegged interest rates to unemployment but with a high degree of excess capacity, many companies will retain the focus on cost control and efficiency that has been present during the recession and this will clearly extend to the management of their vehicle fleet.
Mike Waters, senior insight & consultancy manager, Arval
‘We see the inflation rate remaining low and tracking reasonably closely to wage inflation – meaning that many workers will not be worse off in real terms during 2014. Added to this, rising house prices will increase consumer confidence leading to a slightly higher growth rate in 2014 due to increased consumer demand.
‘However, retail demand for new cars could be affected by the reduction in PPI claims on disposable incomes as the number of claims falls during the run-out cycle.’
David Hosking, CEO, Tusker
‘2014 looks like it will be a brighter year. As long as inflation can be controlled and interest rates kept low, I believe the economy will continue to recover.
‘House sales are improving along with new car registrations, which are two significant barometers of how the economy is really performing.
‘However, both have to be watched carefully as they could also trigger higher inflation if we don’t keep an eye on the values and volume.
‘The roller coaster isn’t over, but it’s a lot less scary than it has been the past few years.’
Nick Hardy, sales and marketing director, Ogilvie Fleet
‘The UK economy is on track for strong growth in 2014 on the back of a nascent recovery in 2013. Our customers are more buoyant than they were 12 months ago and are more inclined to take positive, forward-looking decisions for their businesses.
‘That does not mean that they are still not cost-conscious and want to make their investments work very hard for them. They still want tighter cost control.’
Martin Brown, managing director, Fleet Alliance
‘The rise in GDP over the latter half of 2013 has led to an uplift in business confidence – especially in the SME sector. Small businesses are hit first by recession but are often the first to recover.
‘Inflation has fallen and, according to the Government, will continue to fall. That is a difficult concept to grasp when in reality the costs of running a business are increasing month on month with rises in energy and transport costs etc.
‘The end result however, is optimism in the market place and hence order levels are increasing but accompanied by increasing pressure on operating margins. These costs cannot be passed on to the customer so have to be absorbed.’
Tobin Jenkins, managing director, Sign Language
‘Although consumer sales have fared well this year mainly from manufacturers’ incentives, there has been a lot of pre-registering going on in the background to get the numbers up.
‘So next year these will have to be sold via more incentives to somebody that has some money, and that could be a problem, certainly until the public has paid for this (credit Christmas). The Eurozone will continue to be a problem, producing vehicles with no homes to go to.’
Alan Senior, head of valuation services, VIPDATA
‘The economy will continue its recovery in 2014. Vehicle leasing is set for steady growth, particularly in the SME market, where companies are increasingly turning to this form of finance instead of bank lending, which is costly and hard to obtain.
‘Growing consumer confidence and a continued dearth of quality 3-5 year-old used vehicles should sustain strong prices for ex-fleet cars and vans. Meanwhile, we are confident that the DVLA’s modernisation programme will cut red tape and start delivering cost savings for fleet operators.’
Gerry Keaney, chief executive, BVRLA
‘Overall I believe that there is reason for optimism in the economy. The economy has been supported by consumer spending, underpinned by borrowing. Interest rates should remain at low levels for a while leading to continued consumer spending thereby benefitting the motor industry.
‘However, it would be good to see the economy being driven by other factors. So any actions that the government can take to stimulate growth in the corporate sector and increase investment should be welcomed.’
Martin Ballard, corporate solutions director, Volkswagen Group Leasing
‘Ebbon-Dacs is seeing increased business confidence amongst its customers as the economy shows real signs of recovery. Forecasts for 2014 put growth rates at an encouraging 2.7%, with suggestions of a rise in interest rates the following year.
‘We would not want to see the Government changing course dramatically from the one we are currently following. The UK economy is on track for growth next year on the back of the recovery we have seen in 2013.’
Robert Pilkington, managing director of the Leaselink International division of Ebbon-Dacs