Demand-based short-term car leasing using a subscription-style funding solution is anticipated to increase in popularity as a lack of confidence continues to undermines traditional three and four-year contracts, claims Goodlease.
Tony Donnelly (pictured), chief executive of Goodwood Corporate Mobility, parent company of GoodLease, believes demand for company cars on contract lengths up to 12 months is set to accelerate.
Long-term business uncertainty over the fall-out from the UK’s departure from the European Union on March 29 and a general lack of business confidence meant employers were risk-averse with many not prepared to sign-up to three and four-year contract hire agreements or invest their own cash in buying company cars, says Donnelly.
Donnelly, whose Goodwood Corporate Mobility stable of brands also includes interim fleet management specialist FleetLocum, said: “Fuelled by a wealth of fleet industry and business uncertainty, corporates are learning that they can hire quality cars for periods of up to 12 months and sometimes longer on the same terms as they can get a 36/48 month lease.
“Additionally, businesses are not tied into lengthy contract agreements and do not risk the imposition of potentially exorbitant end-of-contract charges. Equally, they don’t have to concern themselves with vehicle maintenance due to today’s longer service intervals, while the new car is a motivational tool for an organisation’s workforce.
“Furthermore, subscription-based and pay-on-demand business models with cancellation on demand frequently without penalty are established in other areas, notably the mobile phone sector, and could be utilised in the vehicle leasing arena.
“Add in to the fact that, particularly in major conurbations, traffic congestion, parking and the introduction of Clean Air Zones are all making car ownership more difficult and it is not impossible to see that demand for car usage paid for using methods that are proven in other sectors of the economy could become acceptable and popular in the traditional perk company car sector.”
He concluded: “Corporate uncertainty fuels a requirement for business flexibility and that means employers must be nimble and have the capability to react quickly to changing circumstances so there is a reticence to sign long-term contracts, particularly in non-core markets and that means in the supply of perk company cars.
“A subscription car service allied to a pay-on-use model will not be suitable for every business and every perk company car driver, but it will work for many. In return for a monthly fee, an employee would have access to whatever vehicle they required whenever they wanted it. That could include, for example, a small car during the week and a lifestyle 4x4 vehicle at weekends with any additional costs met via a trade-up, pay-up facility.”