Fleet News

Contract hire: SMEs are seeking greater flexibility

By Steve Whitmarsh, Run Your Fleet

Nearly three months on from Brexit, and you might be forgiven for wondering what all the fuss was about.  In fact, some markets appear to be in rude health. We haven’t had an emergency budget and house prices haven’t crashed. In fact, house prices have risen, and many sectors are seeing growth.

Scratch beneath the surface, though, and there is a lot of uncertainty, particularly in the SME sector, and we are seeing this uncertainty affect the decisions the sector is making about its fleets.

Our customers’ fleets range from two to more than 1,500 vehicles and we are seeing, predominantly in the smaller fleets, a willingness to realise capital by disposing of their owned fleets. Instead of moving directly to contract hire with a longer contract tie in they are opting for short lease vehicles on contracts of two years or less. We are even seeing some opting to switch their whole fleet into short lease products of 12 months or less.

The lack of information coming from central government is not helping SME business confidence as there is considerable uncertainty over future costs. Those that import goods are seeing their costs rise with the exchange rate. 

On the other hand, exporters are benefiting from the exchange rate. However, those that export, particularly to the European Economic Area (EEA), face an uncertain future, especially as now we hear comments from former European Council presidents, such as Herman Van Rompuy, that there will probably be “no substantive talks for 12 months” into how Britain will operate outside the EU and the trade access we will be given within it.

The Federation of Small Businesses (FSB) says one in five members exports to the EU, so no wonder there is such an overwhelming feeling of uncertainty within the SME market.

It is not surprising that SMEs do not want to commit to longer term contracts and what they are now looking for, and increasingly asking us for, are products which have a larger degree of flexibility.

How this will shape the fleet industry over the next few years will be very interesting.

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