The era of cheap funding is over, according to John Lewis, chief executive of the BVRLA. Instead, contract hire and leasing companies will be focusing on cost reduction policies and managing older vehicles as contract extensions lengthen.

Speaking at the GE future of fleet conference, Lewis said: “The era of cheap funding which helped leasing companies to offer highly competitive lease rates before the recession is definitely over. For the foreseeable future, the cost of funding will remain much higher than it has been in recent years.”

He added: “We expect to see the leasing industry’s focus continue to change, certainly to contain costs, something that is going to take on an increasing amount of importance as leases lengthen beyond the traditional average of three years, with older vehicles bringing maintenance challenges.”

Lewis predicted that fleets would need flexible transport needs until confidence picks up. “There will be short-term arrangements for up to the next two years until companies start buying cars again.”