THE only certainty about the past 12 months has been uncertainty as pandemic lockdowns and tiers along with Brexit threw the automotive market into confusion.
This was reflected in the Leasing Broker Federation’s rolling online survey, powered by APD Global Research, which has revealed how broker members have dealt with an ever-changing market place.
The third wave of the survey was conducted between 22nd October and 1st December 2020 and showed an increase 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.
What can we conclude by this? 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 3 months of this year.
The latest feedback shows that the level of optimism for fleet growth over the next 12 months is at the highest it’s been all year with 55% of Brokers in wave 3 believing their fleet size will grow over the next 12 months, compared to 41% in wave 2 and 48% in wave 1. The percentage of Brokers who think their fleets will decrease is at it lowest all year at 15%.
This would indicate that the leasing broker market is holding up quite well and future growth is a real possibility.
The trend prediction of selling less petrol and diesel vehicles and more hybrids, PHEVs and BEVs has been consistent throughout the year. Although interestingly, the wave 3 feedback has seen an increase in pure EV cars and a slight decrease in Hybrids and PHEVs. This may indicate that the predicted move from petrol and diesel to pure EV needing the stepping stone of hybrid or PHEV may not be the case, or certainly not as black and white as first thought. It would be interesting to overlay this on top of the various manufacturer product launches over the course of the last 12 months.
There was a significant increase of regular customer contact in wave 1 to wave 2 from 7% to 80% and this increased further to 88%in wave 3. It marks a huge shift in customer interaction and Brokers need to be on top of their customer handling skills and processes.
PCH or PCP?
There has been a general trend over the past 12 months in the increase in PCH and a decrease in PCP 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.
Maybe because of the pandemic, 2020 saw a significantly lower, and decreasing, level of interaction between Brokers and Manufacturers compared to between Brokers and Dealers. The figures for frequent interaction between Brokers and Dealers moving from 86% in wave 1 to 97% in wave 3 is in direct contrast to the frequent interaction with Manufacturers falling from 48% in wave 1 to 36% by wave 3.
This does raise one big question, are the manufacturers missing a big opportunity by not engaging more closely with Leasing Brokers?
What about funders?
In terms of Brokers seeing new entrants, funders leaving or the landscape remaining the same, the only consistent trend over the past 12 months has been the decline in new entrants. Wave 1 saw 22% seeing new entrants, wave 2 14% and wave 3 just 6%.
Understandably the attractiveness of the market has been suppressed this year, along with most markets, due to the impact of the pandemic. In statistical terms there has also been a slight increase in the percentage of Brokers seeing funders leaving the market.
What about 2021?
Difficult to make predictions. Since the December cut off date for the wave 3 survey the UK has gone into another national lockdown. However, if all goes well, and a the vaccine roll-out is successful, we could see a bounce from March/April onwards as those who have been extending leases begin to take out new ones – on top of those coming to the end of their three year cycle.
To purchase the latest Leasing Broker Survey go here.