Perfect Storm Delays Investment Decisions
If there’s anything that businesses need its certainty. Or at least as close as they can get to a predictable state of affairs. It’s vitally important, as economic conditions are part of the basis for a business’ investment decisions, its currency purchases, employment profile or taking loans.
In the UK, conditions for effective business planning have been far from favourable. Unsurprisingly, the three and a half year rollercoaster known as Brexit has been at the centre of this turmoil. Even today, despite having ‘technically’ left the EU, the uncertainty is still hanging around as the government thrashes out what the UK’s trading arrangements will be after the transition period.
In the haulage sector, this situation has brought about a gradual change in the business model as hauliers decide whether to opt for HGV ownership or the flexibility offered by HGV rentals.
The Future In Focus
The 2020 Industry Outlook for Commercial Vehicles report published by the British Vehicle Rental and Leasing Association (BVRLA) gives some insight into the dilemmas faced by the haulage sector and the measures it is taking to address the issues.
The BVRLA, which represents nearly 20% of UK hauliers is seeing a growing trend towards HGV rentals as opposed to HGV ownership as the primary way delivery firms are re-fleeting in response to potentially turbulent economic conditions. As Gerry Keaney CEO of the BVRLA, said:
“Many truck and van operators are delaying re-fleeting decisions, largely due to a lack of confidence in their ability to forecast as a result of continuing uncertainties.”
The Currency Of Change
Related to the Brexit issue are several other environmental pressures that will detract from the profitability of delivery firms. These include the proliferation of clean air zones throughout the UK, including London’s expansive ULEZ. Hauliers are now favouring HGV rentals while the technologies needed to develop greener fleets, including fit-for-purpose delivery EVs, mature.
Currency fluctuations and the relative weakness of the pound in recent years is also affecting HGV ownership decisions. Mark Middleton, head of sales at Dawson group Truck and Trailer, sums up this situation well when he says:
“If the price of imported vehicles increases by 16%, and we have a weak pound, that could change the whole model for cost of ownership
“Leasing and contract hire will become not only more affordable but also more practical and protective than an outright purchase.”
The Way Ahead
Some will argue that the way ahead is now more certain. With the Brexit question settled at least in name, the assumption is that businesses now know the direction of travel. This in itself is unlikely to divert smaller firms away from HGV rental to HGV ownership. Predictions indicate that the market for rentals is set to expand further in 2020.
One thing the sector can rely on is the continued quality and reliability of a Truckcraft vehicle built using a versatile range of body types. Whether it’s for direct purchase or for use as part of a rental fleet the care and attention to detail, we put into our products mean no matter what the future holds your Truckcraft Bodies vehicle will always be there to support you.
For more information on our range of body types for your delivery or leasing firm, please contact the Truckcraft Bodies sales team on 0161304 9404. Alternatively, email glen.pinder@truckcraftbodies.co.uk oremma.jane@truckcraftbodies.co.uk.
Published: Feb 19