Fleet News

Industry divided over impact of war

FLEET operators face a struggle to plan their fleet strategies amid conflicting claims about the effect of war in Iraq.

As coalition forces close in on the Iraqi capital Baghdad, leading industry figures in the UK have clashed about the impact on demand for vehicles, with claims that consumer confidence has slumped, while fluctuating oil prices are playing havoc with fleet fuel budgets.

The Society of Motor Manufacturers and Traders (SMMT) this week claimed the war was having no significant impact on new car sales. Its comments follow dramatic figures from CarPriceCheck revealing buying activity had collapsed by 35% so far this month – traditionally the busiest time of the year for the new car trade.

CarPriceCheck, which monitors new car transaction prices from franchised dealers, internet retailers, importers, car supermarkets and manufacturers, said that from March 12 to 14, when hope of a diplomatic solution to the current crisis ended, sales fell by 65%.

Steve Evans, CarPriceCheck managing director, said: 'Unless consumer confidence rallies during the last 10 days of the month it is entirely possible that between 60,000 and 80,000 sales will be wiped off the books in March and April.'

A spokeswoman for the SMMT said although the organisation's own research during March had shown a small drop compared to last year, sales were still ahead of March 2001. She said: 'Our indications are that there isn't any noticeable decline. Figures may be slightly down year-on- year but they are still slightly above 2001 levels.'

But a collapse in consumer confidence could play into the hands of fleet decision-makers, putting them in a powerful buying position with dealers and manufacturers desperate to sell excess stock. Yet any advantage could be offset by confusion over fuel prices, which may rocket if the war is prolonged.

Last week, due to optimism that the war could be short, oil prices had dropped to about $25 a barrel following a high of nearly $40 last month, but have risen again by a $1 a day this week. According to Arval PHH AllStar, the price of UK fuel has been creeping upwards over the past month, with unleaded up from 77.67 pence per litre at the end of February to 79.05ppm last week. Prices on many forecourts are already over the 80ppl level. Diesel has suffered a similar rise, climbing from 78.84ppl to 81.76ppl over the period.

Arval PHH believes that prices are artificially high due to hype and speculation about the war and should settle in the next couple of weeks, possibly coming down by two pence per litre. This week, oil firms blamed the rise not only the war, but unrest in Nigeria ahead of its presidential election, which has seen oil production cut by a third.

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