Vehicle pricing a major concern for leasing sector
Vehicle pricing is a major concern, with both acquisition costs and borrowing rates rising between order and delivery, according to the British Vehicle Leasing and Rental Association (BVRLA). More than two-thirds (70%) of BVRLA members cite pricing uncertainty as a major issue, with both acquisition costs and borrowing rates rising between order and delivery. With order books bulging and unfulfilled deliveries, more than half (58%) are resigned to the fact that lengthy lead times are now standard. The commercial vehicle hire sector, both vans and heavy goods vehicles are in desperately short supply, leading to price rises. A third of light commercial vehicle operators believe this supply crisis will improve to pre-Covid levels in 2023, with 57% forecasting that the current situation will continue for at least the next 12 months. Overall, 92% of rental companies identify vehicle supply as a challenge for next year. Despite the difficult business environment, BVRLA members are hopeful of sales transactions increasing as the emergence of new business models keep the sector agile. The BVRLA report says that demand remains strong, with business contract hire steady and economic conditions favouring flexible short-term hire solutions. Optimism is even greater in the light commercial vehicle sector, where 45% forecast that 2023 will be a stronger year for van contract hire, an outlook that is more than twice as positive as predictions for HGV leasing (20% stronger). Rental companies are particularly buoyant about the year ahead, with the flexibility of short-term hire proving attractive to businesses that do not want to make long-term financial commitments. Overall, the rental industry expect demand in 2023 to be stronger than 2022, while flexi-rental products for light commercial vehicles are forecast to boom.