Fleet News

Tax and the economy hinder growth in fleet

AN economic slowdown and the introduction of emissions-based company car tax are being blamed for hindering growth in the UK fleet services market over recent years.

It is estimated in a new report that the value of the market will this year reach £11.8 billion, up 2% on last year.

This represents a slowdown as bigger growth of 4% was recorded in 2002/2003, according to a report called The UK Fleet Services Market Development Report, produced by Market & Business Development (MBD). In real terms the growth for 2005 ‘suggests a static market’.

It said: ‘Market growth is hindered by the current economic slowdown and legislative changes which have made it less attractive for companies to provide company cars for employees.’

On future market potential, the report said: ‘The development of the UK fleet services market is expected to remain relatively static when measured in real terms over the next five years. Overall, the market is forecast to increase by a modest 1% in real terms between the current year and 2010, with some annual fluctuations expected.’

But it believes a trend towards companies outsourcing the running of their fleets will continue to offset the ‘restricting factors’ for leasing companies.

The report also looks at replacement cycles and notes that more and more fleets have adopted four-year replacement policies. It said: ‘A significant factor in determining the rate of market development, particularly in the fleet sector, is the replacement cycle of cars.

‘While cars offer increasing reliability, in theory lengthening the possible replacement cycle, the trends in the market do not reflect this. The continual launch of new models and the general trend towards replacing cars at regular intervals, particularly around the three-year mark for new cars when regular MoT certification is required, continues to stimulate the market. However, the trend for longer replacement cycles continues. The effect of the increasingly reliability of cars is represented by the fact that a number of businesses now employ a four-year policy when replacing vehicles.’

  • For a copy of the report, priced at £550, visit www.mbdltd.co.uk or telephone 0161 247 8600.
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