Is leasing the new buying?

As COVID-19 restrictions end, attitudes towards purchasing fleet vehicles may be changing. Organisations which require fleet vehicles are showing greater intentions towards leasing than before. This trend is expected to carry over all sectors of businesses. Do you think leasing is the buying?

COVID-19

The reasons for this change largely stem from events that have occurred over the last 18 months. Firstly, is the COVID-19 pandemic which resulted in many people working from home. Even as restrictions have been lifted, working styles have changed permanently with many opting to continue to work from home or adopt hybrid working. For many organisations this has reduced the need for large fleets. With workers coming and going, leasing the necessary vehicles for specified time periods can be a more economical option. By doing this, organisations can increase liquidity or reallocate money elsewhere.

CAZ

Secondly, many cities are now introducing Clean Air Zones (CAZ). This has big implications for fleets of lorries and vans as they likely travel through cities on a regular basis. Traditional Internal Combustion Engine (ICE) fleet vehicles will soon face charges when travelling through many CAZs. As a result, fleet operators are being encouraged to transition their fleets to newer or electric vehicles (EVs). For most organisations this involves a large outlay in one instance and may be very costly. Therefore, an attractive alternative for many organisations is the option to sell their existing vehicles and lease new fleets.

Semiconductor shortage

Another area of consideration is the increasing lead times on electric engines due to the semiconductor shortage. Semiconductors are a key element in electric engines, meaning delays in production. As a result, many businesses may struggle to upgrade their fleets in time to be compliant with CAZ. This may make leasing a more viable option, if they are concerned about avoiding CAZ fees.

Overall, leasing presents an appealing option for organisations with fleets. The opportunity to release cash whilst still being able to upgrade their fleets could be a great strategic decision.

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