Christopher Macgowan
Society of Motor Manufacturers and Traders (SMMT):
'Yet another record for new car sales looks set to be shattered as registrations edge upwards, but it is unlikely that this year will be quite so crazy. Despite the growth in car sales over the last four years, the clever money seems to be on a slight fallback to 2.5 million cars this year as the housing market slows and interest rates flutter upwards.
The growth in 'heavy vans' continues apace as the new home delivery market continues to boom. The real challenge this year will be the crumbling transport infrastructure which really does hamper UK plc and puts us at a huge disadvantage compared to our global competitors.
Ian Tilbrook
Managing director, ING Car Lease
'We predict that 2004 will be 'the year of the margin' for the leasing industry and that it will have knock-on effects on pricing for fleet leasing companies and their clients. We believe this is in response to trends throughout this year, which made 2003 'the year of the deal'.
'The dealers were sent so much stock last year, which meant that they had to discount heavily and because one dealer reduced prices, others had to follow suit in order to compete.
'The industry, in particular manufacturers, will experience a shrinking market in 2004 and they have already been reducing production as appropriate to match that.
'This has already been seen with BMW, which is maintaining volumes by introducing niche ranges, targeted at smaller markets and potentially creating new markets to accommodate lifestyle changes. This strategy allows manufacturers to reduce volume in specific sectors, while maintaining a certain total volume.
'All of this will play a part in making this year 'the year of the margin'. If discounts return to a more sensible level, it will be easier for car leasing companies to maintain a consistent level of discount within their pricing structures.
'If discounts are erratic, it will not only be difficult for car leasing companies to manage, but fleet managers will have to constantly change vehicles from one band to another if it is based on price.'
Andrew Shepherd,
Senior group auctioneer, Manheim Auctions
'Manheim Auctions expects to see the market continue with the strength it enjoyed in 2003.
'Issues such as extended replacement cycles and concentration of diesel vehicles look set to shape the market in the coming year. We advise fleet managers to think long and hard about diesel replacement cycles following the boom in new diesel car sales. It is a false economy to keep diesel cars well beyond six figures. I would recommend a diesel replacement cycle of two years/up to 60,000 miles, three years/up to 80,000 miles or four years/up to 80,000 miles.
'The MPV sector, which defied market predictions in 2003 looks set to continue to surprise the market in 2004 as further new models come into the market.
'As we enter into a new year there is always speculation as to how the market will shape up. For 2004, I'm confident that we will continue to enjoy a strong market that will no doubt throw up a few surprises along the way – but then again, that's what makes the motor trade the dynamic business that it is.'
Vincent St. Claire
Managing director, Arval PHH Fleet Division
'Health and safety will remain the big issue this year. Not only do companies have a duty of care over their drivers, but board directors could also end up held personally responsible if there's an accident that could have been avoided.
'It doesn't matter if cars are obtained via contract hire, bought on cash-for-car schemes or drivers use their own vehicles for business, employers must ensure that they are fit for use, properly maintained and driven safely. Companies must have an audit trail in place to protect themselves.
'We also expect to see more focus on having an appropriate fleet policy. That covers the types of vehicles acquired as well as the methods used to finance them. Fleets should 'buy smart', which often means a blend of funding methods. Some drivers will be better off with contract hire, others in PCP or ECOP vehicles.
'I'm sure the trend of companies investigating cash-for-car packages will continue and an element of the company car population may migrate across to these schemes. However, I do not believe we will see the wholesale migration that some industry pundits predicted in the past year, especially given the duty of care issues.
'Greener motoring is another issue that will receive greater focus in 2004. The success of congestion charging in London is likely to lead to similar schemes elsewhere, plus there's increasing interest in hybrid vehicles in the fleet market.'
Kevin McNally,
Managing director, LeasePlan UK
'After an eventful 2003, this year promises to offer up a similar host of issues that will directly impact on businesses running fleets.
'The Government plans to announce its draft bill on corporate manslaughter in the near future. It is important that companies start thinking about implementing risk management procedures now.
'Research conducted last year by LeasePlan highlighted the extent of the problem with 70% of businesses admitting they had not yet implemented procedures to protect themselves against the possibility of potentially crippling corporate liability claims.
'The changes made to Block Exemption regulation in 2003 will potentially have a dramatic effect on the industry. LeasePlan expects that increased competition in the marketplace will provide greater flexibility, improved service levels and possibly reduce costs - providing real benefits to customers.
'Away from these issues, we predict that the trend towards large companies leasing their vehicle fleets will continue. Research commissioned by LeasePlan showed that of those companies that purchased their vehicles outright, 35% expect to move towards leasing this year and in the longer term.
'As a result, we expect that there will be continued uptake in sale and leaseback. Within the larger fleets, we also expect to see ongoing interest in Employee Car Ownership schemes and further growth in fully outsourced fleet management solutions, both of which were highly successful areas for LeasePlan in 2003.'
John Lewis,
Director general, BVRLA
'2004 is going to be interesting. I believe that there will be a number of surprising developments both in terms of customer services and Government initiatives. On the customer front we will see a continuing expansion of the leasing market, especially given the findings from the recent BVRLA survey plus the undoubted opportunities presented by the likely outcome of the Corporation Tax review.
'On the personal leasing front, and that includes ECOs, we are already starting to see industry consultants retracting their previous advice. This often provided short term gain at long term cost to their clients. Instead advice is now tending towards a mixed fleet policy where the needs of both company and driver are met more appropriately.
'The service mix from leasing companies will change too. New products, often arising through customer demand, will provide a still-wider portfolio of leasing services such as driver licence validation and fines administration will help encompass the cradle to grave nature of total vehicle management.
'One area we believe the Government will soon have its sights set on is the approved mileage rate for the use of private vehicles on business. At 40 pence per mile the Government believes it encourages people to use their, generally older and higher polluting, private cars instead of the pool or rental car. We expect this to change in the not-too-distant future so as to help realise the Government's tough environmental targets.'
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