The claim follows the shock announcement of the closure of CitiCapital Fleet, one of Britain's biggest leasing firms, by its owner CitiGroup. The move has prompted fears that other owners of leasing companies could be forced to consider leaving the market.
Fleet management company Goodwood Fleet Management claims the closure may be the first of many changes that will reshape the contract hire market and could throw fleet supply arrangements into chaos.
Managing director Tony Donnelly said: 'I believe there is a strong danger that other companies – particularly those owned by financial institutions – may follow suit and pull out of contract hire if the profit margins are not strong enough and they are in danger of being exposed financially because of falling residual values.
'It's clear that a sharp fall in prices for new cars and the knock-on effect in the second-hand market has had a huge impact on post-contract residual values.'
He also claimed there was not strong take-up for repeat contract hire business amid a groundswell of demand for personal motoring schemes.
In the letter sent to its fleet customers, CitiCapital Fleet's commercial director Mel Goodliffe revealed the problems facing leasing firms.
He blamed the decision to close on the company's market position, the available returns on investment and the lack of potential for future European expansion. But leading figures in the leasing industry have hit back at the suggestions of further closures, saying CitiCapital Fleet was an isolated case and not part of a wider trend.
Jon Walden, managing director of Lex Vehicle Leasing, which is jointly owned by the RAC and HBOS Group said: 'We have seen the market consolidate over the past three or four years with many smaller players sold, although there still are a lot of smaller players that have a good future.
'I don't think CitiGroup's decision is part of a wider trend involving financial services organisations – in fact, the opposite is true. Those companies with big players in the market are seeing rewards. Most leasing companies are now owned, or partly owned, by financial services organisations.'
He was backed by British Vehicle Rental and Leasing Association director-general John Lewis, who said CitiCapital Fleet was a 'one-off'.
He added: 'It is an unqualified statement to say that others will follow suit. CitiCapital Fleet was not a core business of CitiGroup and was not a huge player in the marketplace.
'Many other financial institutions recognise the benefit of owning leasing companies and use them as part of a cross-selling synergy. In fact, I think most are looking to expand this type of operation and not dispose of it.'
The decision to close CitiCapital Fleet has met with an angry reaction from some of its staff. Those who have contacted Fleet News claim the company has suffered a lack of sales focus over the past three months and a lack of direction.
Login to comment
Comments
No comments have been made yet.