On the 22nd January this year I put out a blog about high registrations and the effect this is going to have on the market and in particular the grappling effects this has with Contract Hire companies as they try to anticipate the second hand market. After all, Lease companies are the main contributor to the second hand vehicle market.
Well… now we are beginning to see the effect of a continued high registration and the impact the financial down turn had on the pent up demand that came some 18 months later after companies held on to their vehicles rather than replace them in 2008/2009. These are now coming back into the remarketing fold following their renewal in 2010/2011 and the impact on the second hand car market is starting to tell.
I mentioned in my blog 21st April about inflation for the year was 0.3% and in contrast vehicles residual values fell by 5.3%. Therefore, those companies that have outright purchased or have financed their fleet via HP who have complete ownership or take on the risk of the residual value will now have an asset that will cost them a little more. It is with this risk that a lot of companies look to pass this risk onto a finance company like a contract hire company.
It is this risk that Contract Hire companies try to mitigate and how they do this is something that I think everyone should be interested in especially if your current lease deal is a sole supply and asking those probing questions that allow you to be informed about how they are going about this and the effect it is having on your lease deal should always be your priority.
It will be interesting to see how this progresses and what the second hand car market is going to look like, leasing companies take different views and it is always subjective but everyone is impacted by it regardless of how you fund your vehicles.
If you want to learn more or would like to see how I can support you with your fleet then please do give me a call on 07801 472247 or email me – Marcus@puddyvsolutions.co.uk
Thanks for now.