Fleet News

Leasing set to become dominant method of company car acqusition, says Equalease

Leasing is likely to become the dominant method of company car acquisition when the fleet new car market regains buoyancy.

Paul Ashton, managing director at Equalease says that a number of factors are likely to mean that fleets which have favoured outright purchase in the past will instead turn to some sort of leasing.

He said: “Up until the recession, there was a fairly even split between leasing and outright purchase for company car acquisition. However, the events of the last few years are likely to mean that many companies are unlikely to return to buying their own vehicles and will instead turn to leasing in the future.”

Ashton explained that there were three main factors behind this – a desire not to use existing capital or take on loans to fund purchasing; a fear of where residual values may head in coming years; and the development of more flexible leasing products rather than standard three-four year leases.

He said: “Purchasing a company car is an act of corporate confidence – it means that that the purchaser has cash available, is capable of handling issues such as maintenance, and is happy to take the residual risk.

“The fact is that in late 2010 and for the foreseeable future, that kind of confidence is in short supply. Instead, businesses are looking to make decisions that minimise their initial outlay, reduce their exposure to residual risk and outsource management of maintenance. Leasing is the answer.”

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