IT’s been a pretty torrid time for the automotive industry over the past 12 months although the latest Leasing Broker Federation Survey reveals a slight a slight growth in optimism for what lies ahead in 2021.
The survey, powered by APD Global Research showed an increase in the number of leasing brokers who believe there will be significant economic improvement over the next 12 months. This year will certainly be interesting as we move through the full scale vaccination programme and gain a better understanding of what BREXIT means for industry and trade in the UK
The near 30% slump in new car registrations in 2020 was no surprise but with the BREXIT trade deal agreed, the vaccination roll out gives light for some optimism. The prediction of 2million new registrations in 2021, compared to 1.6million in 2020, has been dealt a blow due to the third lockdown but the outlook is still for a stronger registration year than 2021.
Optimism among brokers is backed by the Bank of England’s Chief Economist Andy Haldane who said consumer confidence would surge back thanks to the vaccine programme, with the economy firing “on all cylinders” by spring.
He is the latest economist to forecast a sharp rebound in growth after an expected easing of restrictions. The economy is currently set to shrink 4.2% in the first three months of 2021.
Writing in the Mail Haldane said that with vaccinations, health concerns would fall and restrictions would lift, allowing people to return to spending and socialising.
The turn in sentiment was likely to be rapid, he added – “a light-switch being flicked rather than a dimmer-switch being turned”.
Unlike past recessions, Haldane said many UK households had strengthened their finances during lockdown and would have more money to spend. “That might mean two pub, cinema or restaurant visits a week rather than one. “It might mean a higher-spec TV or car or house.”
There has been an increase in Wave 3 of the LBF research, compared to Wave 2, of Brokers believing they will be handling more enquiries in the next 12 months – up to 48% from 36%. This represents a swing back towards the wave 1 level of 50% believing they will handle more enquiries.
The percentage of Brokers saying they believe they will handle less enquiries has remained constant at 30% all year. Is this just a reflection of pre-lockdown 1, followed by the full lockdown, followed by the coming out of lockdown? Wave 1 for 2021 will be a good indicator as we are now in a full National lockdown, realistically for the first three months of this year.
The survey also showed an increase in PCH and a decrease in PCP over the past 12 months but the other significant
trend has seen an increase in the flexibility of contract lengths and vehicle access. This can be seen by the levels of interest now seen in customers enquiring about shorter term contracts, daily rental, flexible contacts and subscription based (car clubs)models.
The phrase “Usership rather than ownership” had been around for a while and perhaps the market conditions over the
past 12months has had some influence on increasing the momentum in that direction. This is definitely one to keep a close eye on in 2021 as it may trigger some fresh thinking from manufacturers, funders and the wider vehicle leasing market.
You can find out more and get access to the LBF survey here.
