Brexit is an uncertain time for UK businesses, with BVRLA members being no exception.
With Brexit negotiations only just starting this is an uncertain time for all UK businesses, with BVRLA members (British Vehicle Rental and Leasing Association) being no exception. It is therefore imperative that the UK government recognises the significance of the current single market arrangements to the automotive sector.
The UK’s changing relationship with the EU single market will create a condition of uncertainty that fleet operators will continually need to respond to. There will be intense negotiating, commencing this year, focused on obtaining a workable trade deal that replaces the UK’s current arrangements within the single market. It is expected that the UK Government will take a pragmatic approach and retain most of the EU regulations and directives but the reality we all face is that any devaluation of sterling will put major cost pressures on the fleet supply chain as prices of vehicles, tyres and parts, in turn, will rise.
Industry changes – 2017 onwards
A small increase in the traditional fleet leasing market is expected, with growth increasing by 10% year-on-year in vans. This growth is a cumulative effect of the increase in online retailing and the trend for companies to downsize from small HGVs and reduce their compliance burden. The UK Leasing sector will see growth continue especially from the SME and consumer markets.
Changes in Services
In recent years boundaries between traditional rental and leasing services have been changing. The commercial van and truck sector, in particular, has seen an increased demand in flexible rental. This form of rental enables customers to hire, return or exchange vehicles without any penalty, in return for a fixed monthly fee. Such a solution may also emerge for car-based products in 2017. The car-sharing market will also grow with the emergence of more technology-based corporate mobility schemes and it is likely that this will further increase with the changes to VED (Road Tax).
Decline of Diesel
With cities such as Paris, Madrid, Athens and Mexico City planning to ban diesel cars, there has been a continuing shift back towards petrol and an increased demand for electric vehicles. Diesel’s share of the new lease market has dropped to around 65% in the UK and industry predictions are that the government will introduce a national diesel scrappage scheme that will target the oldest, highest polluting vehicles.
2017 will see regulators continue their efforts to raise standards across the industry. The Competition and Markets Authority (CMA) will concentrate on price comparison websites and car hire brokers. The aim is to encourage them to follow the benchmark of the BVRLA and its members, who have set the standard for transparency and customer service.
In summary, it is going to be a challenging time for the nationwide UK fleet industry. The UK Government has to deliver a deal that includes participation in the customs union to help safeguard the EU trade tariff. The new tariff must avoid the non-tariff and regulatory barriers that would jeopardise investment, growth and consumer choice.