Leasing Set To Become Dominant Method Of Company Car Acqusition
Leasing is likely to become the dominant method of company car acquisition when the fleet new car market regains buoyancy.
Paul Ashton, managing director of the short term leasing specialist says that a number of factors are likely to mean that fleets which have favoured outright purchase in the past will instead turn to some sort of leasing.
He said: “Up until the recession, there was a fairly even split between leasing and outright purchase for company car acquisition. However, the events of the last few years are likely to mean that many companies are unlikely to return to buying their own vehicles and will instead turn to leasing in the future.”
Ashton explained that there were three main factors behind this – a desire not to use existing capital or take on loans to fund purchasing; a fear of where residual values may head in coming years; and the development of more flexible leasing products rather than standard three-four year leases.
He said: “Purchasing a company car is an act of corporate confidence – it means that that the purchaser has cash available, is capable of handling issues such as maintenance, and is happy to take the residual risk.
“The fact is that in late 2010 and for the foreseeable future, that kind of confidence is in short supply. Instead, businesses are looking to make decisions that minimise their initial outlay, reduce their exposure to residual risk and outsource management of maintenance. Leasing is the answer.”
Ashton added that the emergence of more flexible short term leasing options, such as those offered by Equalease, were also a key factor.
He said: “One of the main reasons companies have avoided leasing in the past is because of the lease lengths on offer – usually three or four years. That is quite a lengthy commitment for a business that is very concerned about what the next six months in the current climate.
“The development of short term leasing of periods from 3-12 months means that employers can gain the key benefits of leasing without the long term obligation, and removes another barrier to its adoption.”
Founded in 2003, Equalease is an innovative, independent leasing company that has developed a specialism in medium term company car leasing to businesses of all sizes. Offering vehicles from major manufacturers such as Audi, BMW, Lexus, Mercedes, MINI and Volkswagen, leases include all maintenance and breakdown recovery, road fund licence with a standard annual mileage allowance of 15,000 miles a year or 1,250 miles a month. Further details can be found at www.equalease.co.uk
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