Moment of truth for fleets on the horizon as furlough comes to a close
At the end of next month, the furlough scheme is due to finish.
Whether we should be concerned that the end date falls on the same day as Halloween remains to be seen.
Superstitions aside, October 31st will be a defining moment for British businesses, many of whom have relied on the scheme to continue to trade through the Coronavirus crisis.
Leasing companies have done well
The typical approach taken by leasing companies across the UK was a good one. Most have looked after their clients since everything started going pear-shaped back in March.
Examples of rental deferrals, contract extensions and negotiations based on compassion and mutual understanding have been manifold.
But what about life after furlough?
How will that look?
And how worried should we really be?
Thanks to the scheme, there haven’t been as many news stories about mass redundancies as we might have expected. Until now, at least.
While the official UK unemployment rate has looked encouraging (and, frankly, a little confusing) over the last few months, experts suggest that the numbers are “lagging behind the reality on the ground”.
The latest statistics show that UK unemployment remained near all-time lows at the beginning of the summer, at 3.9%.
But the stats are somewhat warped since they’re partially based on how many people are actively looking for work. (If you remember, lots of people weren’t really doing anything, let along looking for work during the throes of the lockdown.)
It’s likely that the statistics will soon start to catch up with what’s really happening in businesses, particularly once the furlough scheme has finally ended next month.
So what does that mean for fleets?
While news stories only report what’s going on inside big business doors, SMEs will soon ramp up redundancies too.
And that means we can expect many more lease cars to be returned over the next few months. In August alone, new car registrations fell by 5.8% while fleet and business registrations declined by 8.9%.
Though when you bear in mind that August’s new car registrations tend to be slow ahead of the September plate change, that doesn’t sound so bad.
So with increasing returns and fewer new car sales, can we expect a spike in used vehicle sales? Of course, it’s inevitable, though whether there’ll be much demand for those vehicles in the short-term remains unlikely.
Cost-cutting exercises will continue and it’s likely that companies will keep a keen eye on miles being clocked and minimise face-to-face meetings too.
It’s not all doom and gloom
But it’s not all bad news for fleet companies, thanks to rises in home deliveries and personal leasing, as more consumers look for alternatives to public transport.
Indeed, the fleet industry continued to hold a 54.4% market share of new car sales in August.
In the long-run, leasing companies should take advantage of zero emission vehicles tax benefits to reinforce their numbers and thrive post-furlough.
What’s your take on it all? Drop a comment below and tell us!