Leasedrive Velo has made predictions for the coming year. They’re focused on the contract hire market – but many guesses make vital reading for car dealers, too.
• Oil price
We should see less volatility in the oil markets next year, with barrel prices expected to hold steady at around $50. If China gets caught up in the economic woes of the US, Japan and Europe, barrel prices could fall by half.
• Climate change
Climate change will continue to dominate, especially with the incoming ‘pro-Kyoto’ new US Administration. The UK Government is committed to halving carbon emissions, and has adopted a CO2 emissions-based taxation regime.
• Focus on low CO2 emissions
Car makers will focus on sub-120 g/km cars. Already the most attractive vehicles in the UK are those with CO2 emissions of 120g/km or less, so employees get taxed less. The natural ceiling for the company car fleet will be 160g/km.
• Death of the dinosaurs
The gas-guzzling 4×4 will become history, except for those owners who genuinely need them. Luxury executive and high performance sports cars will also decline. However, when the good times return, a desire to ‘drive the dream’, may still prove attractive.
• Hybrid growth
Spurred by F1’s KERS system next season, hybrids will become mainstream. They will have a better cachet in the years to come, supported by strong residuals.
• Rental growth opportunities
Tough economic times can present opportunities for vehicle rental. A reduction in company car benefit and pool car costs will spur greater demand. With so many new cars unsold, expect vehicle manufacturers to perform a U-turn on responsible marketing, and seek a short-term solution to their problems by flooding the vehicle rental market. With residuals in free-fall anyway, what have they to lose?