Despite the difficult economic circumstances, at CBVC we’re optimistic about the year ahead – here’s why.
Why are we optimistic about 2024? Let’s start with the vehicle supply issues which have plagued the automotive sector due to the pandemic and the semiconductor computer chip shortage. These shortages are set to ease dramatically. In fact, 43% of respondents to the BVRLA’s recent industry outlook survey expect car supply to be back to pre-Covid levels by the end of 2024.
Increased supply should mean that business customers who have been holding onto ageing vehicles are finally able to replace them, which will lead to further growth in business contract hire (BCH) for both cars and vans.
The replacement cycles have already started: up to the end of Q3 2023 the BVRLA saw a 3.3% increase in vans coming onto fleet while business contract hire saw growth of 4.8% year-on-year. We expect much more of this in 2024.
It will also mean that fleets get to benefit from the newest technology, particularly around electric vehicles.
Personal contract hire (PCH) deals, meanwhile, will also benefit from greater stock availability and keener leasing deals.
Salary sacrifice, which soared in popularity last year thanks to low benefit-in-kind rates for electric vehicles (EVs), will continue to appeal to drivers who have opted out of traditional company car schemes and are finding their previous allowance doesn’t get them the same level of car previously.
In addition, the growth of the Environmental, Social and Governance (ESG) agenda will see more corporations wanting to provide electric car salary sacrifice schemes to demonstrate commitment to decarbonisation.
For employees there’s a real benefit in the form of an electric car at a much lower cost than leasing an electric car personally. More importantly, it’s an all-inclusive cost, there’s no impact on personal credit lines and no requirement for employees to find an advance rental as they would on PCH.
A better customer journey
Digitising processes, from customer orders and vehicle configuration through to in-life management, is set to be another key trend in 2024, according to the BVRLA.
Here at CBVC we’re working on a website redesign this year, which will result in a better customer journey and greater clarity of what we can offer customers.
How eLCVs can benefit your business
The industry will also be working hard to demonstrate the benefits of electric vans (or eLCVs) to businesses.
Yes, eLCVs have their shortcomings and won’t work for every business at the moment, but for those carrying smaller loads over short ranges there’s a wide range of zero emissions vans to choose from. And as the year progresses, we expect to see a greater variety of new electric vans hitting the market with higher load carrying capacities and longer ranges.
Cars will be cheaper and more expensive – both at the same time
On the car side, EV depreciation has, hopefully, stablised and with new, cheaper cars arriving, they should look better value. Some internal combustion engine (ICE) vehicles, on the other hand, could get more expensive with increased depreciation. But with interest rates looking to have peaked, and with discounts appearing, the general trend we expect to be lower rental rates on a variety of cars – but not all.
New entrants to the EV market
We expect European car manufacturers to come under significant pressure from keenly priced EVs from China. These include significant players such as BYD – or Build Your Dreams, and start-ups such as Nio (which may bring swappable batteries to the UK) – pictured – and Xpeng to name a few.
If these manufacturers can give fleets the warranty, parts and repair networks they require to ensure any vehicle issues are fixed swiftly, they could become very attractive.
On the subject of repair networks, the bleak news is that service, maintenance and repair (SMR) costs and the parts availability challenges remain, which of course has a knock-on effect on vehicle downtime.
To counter that, we would advise fixing maintenance costs and perhaps adding relief vehicle provisions into your contract.
If you need assistance with your fleet in 2024 please don’t hesitate to contact us on 01283 351200 or contact us via email at sales@cbvc.co.uk.
