Brexit is biggest challenge facing BVRLA members this year, says chief executive

Brexit will be the biggest issue facing members of the British Vehicle Rental and Leasing Association this year, says its chief executive, Gerry Keaney.

The organisation, which is now in its 50th year, enjoyed a record year last year and saw its membership pass the 900-mark with a combined fleet of 4.7 million vehicles.

As of January 1, the association’s 908 members are now responsible for 4,711,503 cars, vans and trucks – an increase of 5.2% year-on-year.

The BVRLA has seen growth in all of its main membership categories this year, but the biggest increases were related to the SME and personal leasing market.

The association welcomed nearly 100 new leasing brokers into membership last yearand saw the personal leasing portion of its member fleet grow by 13% to 1.6 million.

The corporate leasing fleet saw more modest growth of 1.7% while the rental fleet remained static.

Keaney said: “Last year was a record year for new car, van and truck registrations and BVRLA members are the key drivers of this automotive success story.”

Giving his outlook for next 12 months, Keaney said: “You don’t need a crystal ball to identify the big challenges facing our industry this year.

"First and foremost is Brexit and the political and economic uncertainty this brings, closely followed by our growing air quality crisis.

"Our industry also has to get to grips with some very significant and deeply flawed changes to the tax and emissions regimes.

“We will celebrate the BVRLA’s 50th anniversary this year and I have no doubt that it will be the busiest year in our history.

“The vehicle and rental industry is resilient, innovative and totally client focused. Our members will continue to meet these and other challenges, turning many of them into opportunities to deliver yet more value to their customers.” 

Looking ahead to 2017, the BVRLA has provided the following outlook:

1. Fleet operators need to get used to operating in a climate of uncertainty when it comes to Brexit. There will be lots of fervent negotiating in 2017, most of it centered around obtaining a workable trade deal that replaces the UK’s membership of the single market. We expect the UK Government to take a very pragmatic approach in retaining most EU regulations and directives, but any devaluation of sterling will put major cost pressures on the fleet supply chain as prices of vehicles, tyres and parts are expected to rise.

 

2. We will see a low single digit percentage increase in the traditional fleet leasing market, but growth for vans will be much stronger, at around 10%, year-on year, led by the continued growth of online retailing and the trend for companies to downsize from small HGVs and reduce their compliance burden. The SME and consumer markets will continue to drive most of the organic growth in the leasing sector, and we predict some BVRLA members will again report double-digit growth in personal contract hire volumes.

 

3. The blurring of boundaries between traditional rental and leasing services will continue. In the commercial vehicle sector we’ll see a continued growth in demand for flexible rental, which enables customers to hire, return or exchange vans and trucks without any penalty, in return for a fixed monthly or weekly fee. We may see similar car-based products emerge in 2017, and the car sharing market will continue to mature with the emergence of more technology-based corporate mobility schemes.

 

4. In terms of CO2 emissions, the BVRLA lease fleet will continue to become even greener and outpace the reductions seen in the wider new car market. The rate of decline will slow, however, as the impact of VED and company car tax increases dissuade people from choosing an ultra-low emission vehicle.

 

5. The shift from diesel to petrol and electric powertrains will gather pace, with diesel’s share of the new lease car market falling towards 65%. Diesel will come under particular pressure in urban areas as more cities announce their clean air strategies and the government is forced to re-draft its national plan. We predict that the government will give serious consideration to a national diesel scrappage scheme that targets the oldest, most polluting vehicles, and believe the government should encourage people to swap their cars for vouchers that can be used on public transport or car clubs and car rental.

 

6. Regulators will continue their efforts to raise standards across the industry. The Competition and Markets Authority (CMA) will turn its attention to price comparison websites and car hire brokers, and will encourage them to follow the lead of the BVRLA and its members, who have set a benchmark for transparency and customer service. Three years since the Financial Conduct Authority (FCA) took over regulation of the credit market, we expect it to prioritise the protection of vulnerable consumers and consult industry on how this can be secured.

 

7. After years of discussion, 2017 will be the year firms start getting ready to implement the new lease accounting rules. The BVRLA will continue to work with accountancy firms and accounting standard setters to ensure the new lease accounting standard is implemented sensibly and in the least burdensome manner for members.

 

8. The fleet sector will see a raft of innovative connected services introduced in the next 12 months, primarily in the area of servicing, maintenance and repair. Manufacturers will be keen to rollout these new services in a bid to drive more business to their franchised repair networks, while an explosion of smartphone-based fleet management and driver apps will bring the cost, emissions and road safety benefits of telematics within the reach of every fleet operator.

 

9. Ahead of the new General Data Protection Regulation (GDPR) which comes into effect in 2018, 2017 will see an increased focus on how UK firms ensure compliance. This will become an absolute priority as vehicle and driver data usage rises exponentially.

 

10. Following the publication of last year’s BVRLA report, the public sector will make a concerted effort to tackle the issue of grey fleet. This will lead to some high-profile contract wins involving corporate car club and mobility services.