BVRLA News
www.bvrla.co.uk January 2010
The newsletter of the British Vehicle Rental and Leasing Association
Securing finance: your new year’s resolution by John Lewis The UK economy faces a “weak and fragile recovery” over the next two years, with economic output still failing to hit pre-recession levels by the end of 2011. In its latest forecast, the CBI warns that the first half of 2010 will be a “difficult” period, with more job losses, wage freezes and the inflationary impacts of the VAT rise. None of this paints a rosy picture, but after the 18 months we have had, it is probably one that most of us will gladly accept. But what is the outlook for the vehicle rental and leasing sector? The recession and economic uncertainty that hit the world in 2009 had a dramatic effect on fleet activity. Companies took vehicles off the road, put off decisions and a significant proportion of contracts were extended. Now that business confidence is growing and economic activity is on the increase, some fleets will need to expand. Organisations can’t keep extending contracts indefinitely, although longer leases may become the norm for many. There are two other factors that will have a dramatic impact on vehicle rental and leasing in 2010 – residual values and funding.
A sustained rebound in car and, to a lesser extent, van residual values during 2009 prevented a bad year from becoming an awful one for many members. This strong used-vehicle market was largely a by-product of weak demand for new cars, vans and trucks, coupled to reduced usedvehicle supply. Manufacturers expect new registrations to remain below pre-recession levels for the next couple of years, creating an ongoing shortage of high-quality used stock. This can only help to strengthen residual values going forward. The funding environment is easier to predict. It was our biggest challenge during 2009 and it will stay that way. Much of the liquidity lost when key banks pulled out or drastically reduced their exposure to our market has not been replaced. Finance will remain expensive, scarce and difficult to access for the foreseeable future. We would advise members to seek alternative sources of funding where they can. No doubt 2010 will spring many more surprises for members – hopefully good ones. But I can make one final prediction with certainty. Regardless of what happens to the economy and who wins the forthcoming election, your trade association will continue to promote your interests and deliver the information, advice and services you need to help run your business. ■ John Lewis: discussing industry issues with the BVRLA head of legal services, Jay Parmar
bvrla.co.uk
In this issue Leasing brokers improve their code A stronger code of conduct reflects higher sector standards page 3 MEP backs BVRLA on key EU issues A new ally in Brussels backs the BVRLA’s views on block exemption page 3 Government lures electric vehicle buyers Further support for early adopters of electric vehicles was pledged in the Pre-Budget Report page 4 Get to grips with Euro 5 technologies Do you know how manufacturers will meet this emission standard? page 4 Brains and Brawn at inaugural conference Industry figures and experts gathered at the first ever BVRLA Industry Conference last month page 5 VAT place of supply rules change There’s been a major switch to where VAT is payable on services page 5
— Promoting responsible road transport since 1967 —