BUSINESS WISDOM
The future
of transport
Join the revolution in vehicle
ownership and cut your costs
In association with
Business wisdom
Transport: the shape
of things to come
Welcome to The future
of transport, the first
in our 2014 Business
Wisdom series. Cars
and vans play an
essential role in our
personal and working
lives, but our
relationship with them is changing.
Rather than buying outright, business
owners are increasingly looking to leasing
as a way of managing costs and accessing
the vehicles they need to get the job done
without the burden of a depreciating asset
on their balance sheet.
This supplement explores the drivers
behind this trend and outlines the
tangible benefits for the UK business
community that leasing offers. You can
also find a handful of case studies from
those that have already joined the ‘leasing
revolution’ to help support the growth
of their businesses.
I hope you enjoy this supplement.
Tony Murtagh
Head of SME Direct, Lex Autolease
TRENDS IN TRANSPORT
4
“WE DON'T OWN CARS ANYMORE”
6
JOIN THE LEASING REVOLUTION
8
From electric cars to driverless vehicles, car clubs
to the leasing revolution, we look at the trends
that may affect your business
Three business leaders explain why they have
opted to hire rather than buy
How to get started: From choosing the right
vehicle to getting a quote, we have all the
information you need
LEASING BY NUMBERS
10
Looking for cost-effective fleet solutions? Take
a look at the stats that matter
Group editor Lysanne Currie
Writer Christian Koch
Chief sub-editor Robert Sly
Creative director Chris Rowe
Advertising director Jo McGraw
Advertising manager Ben Hammond
Marketing director Tom Christie-Miller
Production manager Lisa Robertson
Editorial 020 7766 8950
[email protected]
Advertising 020 7766 8900
[email protected]
Production 020 7766 8960
[email protected]
Institute of Directors 020 7839 1233
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Published by Director Publications Ltd for the Institute of Directors, 116 Pall Mall, London, SW1Y 5ED. Opinions expressed do not
necessarily reflect IoD policy. The IoD accepts no responsibility for views expressed by contributors.
NOVEMBER 2014 DIRECTOR 3
Business wisdom
Streets ahead
Directors now have
new vehicles at their
disposal – all without the
prohibitive fees, tax
and insurance costs
of ownership”
I
n the same way that
telephone box
patrons have all but
vanished from our streets,
there’s another urban species
facing extinction. Recently, the
exasperated exec who once
strode into the middle of the
road, arms waving in the air
and spitting expletives as
a flotilla of lights-off hackney
carriages beetled past, has
strangely become conspicuous
by his/her absence.
The reason? They’re
increasingly using car-sharing
services instead, tapping their
destination into a smartphone,
while letting the app’s
algorithm alchemy do the rest.
And if ride-sharing arriviste
BlaBlaCar is anything to go by
(it offers ‘BlaBla’ ratings on
driver loquaciousness), the
chatty cabbie could soon be
joining agitated arm-wavers on
the scrapheap, too.
The poster child for this
transport-sharing revolution is
car-hailing app Uber. Since
launching five years ago, the
Silicon Valley start-up has
grown from a private limo
service to a global business,
recently valued at $17bn
(£10.25bn). By connecting
4
Director Business wisdom
passengers to self-employed
drivers, the app eliminates the
need to hail or even ring a taxi.
It’s a fundamental part of
the much-vaunted ‘share
economy’, where smartphones
and online peer-to-peer
communities means people are
now sharing everything from
accommodation (see Airbnb)
to education (Skillshare).
However, with the share
economy worth £22.4bn of UK
GDP, it’s transport where
this phenomenon is being
witnessed most acutely. And
this trend has affected the
perception of status and
reward – for those who
need access to a car regularly,
leasing is becoming a far more
attractive option than owning.
This revolution in vehicle
ownership particularly
resonates with millennials
(those born between 1983 and
2000). Hit hard by
recession, apps such
as Uber allow them
to access goods and
services they wouldn’t
normally afford. In
the US, it’s estimated
that new car
purchases by 18- to
34-year-olds dropped
by 30 per cent between 2007
and 2012*. It’s not just motors:
bike-sharing schemes are
spreading across the world,
allowing users to pick up and
drop off bicycles at different
locations. The share economy
is even taking hold in aviation.
Taking advantage of ‘emptylegs’ (the outward/return
journey an aircraft makes to
pick up or drop off its full-farepaying passengers), companies
such as JetSmarter offer fares
at dramatically slashed prices.
This revolution in vehicle
ownership has also triggered
a rise in SMEs using vehicleleasing firms such as Lex
Autolease. In much the same
way that consumers have
stopped owning a phone (or
even DVDs and music – see
Netflix and Spotify), directors
now have brand-new vehicles
at their disposal – all without
the prohibitive fees, tax and
insurance costs of ownership.
Indeed, SMEs opting to lease
rather than buy
outright could free up
£6.7bn in depreciating
assets from their
balance sheets.
* Edmunds.com survey, 2013
SHUTTERSTOCK
The £22.4bn collaborative economy is driving transport towards the future, with the
leasing and sharing of vehicles an increasingly attractive option for fleet managers
TURN TO MEET THE BUSINESS OWNERS
WHO HAVE STOPPED BUYING CARS
AND JOINED THE REVOLUTION
NOVEMBER 2014 DIRECTOR 5
Business wisdom
‘Leasing has cut our costs’
THE BUILDING
MANAGEMENT SPECIALIST
THE SHOPFITTING
COMPANY
THE HOUSING
ASSOCIATION MANAGER
Automated Building and
Energy Controls (ABEC) is
geared to target even more
business opportunities in
the UK following a new
vehicle leasing deal with Lex
Autolease. “The cost of
short-term car rentals was
becoming unsustainable for
our business,” explains
Daniel Kittow, ABEC’s
managing director.
The company has leased
10 new vehicles which will
provide significant savings;
integrating low-emission, fuelefficient cars into its fleet not
only supports its core business
proposition of sustainability
but will save ABEC significant
on-road and maintenance
costs that can now be invested
into its nationwide expansion.
“This leasing deal has
significantly cut those costs,
which means we can now
spend more time and energy
delivering our core business
services to existing clients
and focus on expanding our
customer base throughout the
regions,” says Kittow.
www.abec.co.uk
“We hadn’t previously
considered the idea of leasing
but Lex Autolease presented
a compelling case and we
are now set to expand and
capitalise on the retail
sector’s revival,” says Ian
Hunter, managing director
of Harte Woodworking,
a shopfitting business based
in West Yorkshire.
Harte Woodworking has
agreed a leasing deal which
includes the provision of eight
new low-emission vehicles to
support its consultancy team
and contractors. The vehicles
have bolstered the brand and
freed up cashflow to invest in
long-term expansion plans.
“Leasing is a far more effective
way to manage our fleet and
supports our plans to target
new markets and increase
sales,” says Hunter.
“Having our brand
ambassadors drive professional
and reliable vehicles is integral
to our business proposition
and sends the right kind of
message to our existing and
prospective clients.”
www.harte.co.uk
“With more than 3,700 rented
and 445 leasehold properties in
Hertfordshire, it’s important
for us to keep them in tip-top
condition,” says David Leland
of Thrive Homes. “Tenants rely
on us to maintain their home,
whether it’s a handy person to
do minor repairs or someone
to resolve a more serious
emergency. It’s work whereby
we can’t rely on one transit
van. We sat down with Lex
and went through all of the
scenarios. Different types of
vans, what would work for
us, the carbon footprint,
everything. They even added
three 4x4 vehicles to their list
of available vehicles to ensure
we could provide emergency
repairs for tenants. Everything
from personal care to delivery
was dealt with superbly. Thrive
has a fleet of 29 vehicles, each
selected and fitted out to
improve productivity. Tyre
service, servicing the vans,
accident management – that
took up so much of my time
and Lex Autolease has freed
it up again.”
www.thrivehomes.org.uk
6
Director Business wisdom
SHUTTERSTOCK
Three car-leasing advocates talk about their experience of using the services for businesss
Business wisdom
Leasing allows your company
to be a smart pioneer in the
sharing-economy revolution”
Gearing up for change
Frustrated by your company car? Lex Autolease can help you to find the perfect vehicle for
A
s the UK’s motorways,
A-roads and multistorey car parks
gravitate towards transport
sharing, readers could be
mistaken for thinking that
the only people reaping the
benefits are savvy Silicon
Valley start-ups (along with
the odd Uber driver, of course).
Wrong. There’s another
sector well-primed to take
advantage: the British SME
with depreciating vehicles
on their balance sheets.
Billionaire philanthropist John
Paul Getty once coined the
maxim, “If it appreciates,
buy it. If it depreciates, lease
it”. And with the average
SME-owned vehicle having
lost value by more than
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Director Business wisdom
£10,000 since it was first
purchased, car-leasing is one
of the easiest ways for
directors to seek succour in
Getty’s advice.
Car-leasing is an integral
component of the transportsharing economy. Lex
Autolease, the UK’s leading
vehicle leasing company, may
have existed since 1958 but
today it is responsible for one
in every 33 new UK car and
van registrations, managing
over 280,000 vehicles on
British roads and helping
nearly 6,000 businesses in
the process.
For SME owners and
employees, the benefits are
obvious: they can enjoy the
perks of driving a brand-new
vehicle without the burdens
that come with being a car
owner (tax woes, arguing with
cowboy mechanics over spark
plugs, that kind of thing) thus
giving them more time and
money to focus on the crucial
issue: growing the business.
Your company may need
a voluminous van for
transporting stock. A simple
hatchback for your fledgling
pop-up, or maybe you need
a state-of-the-art Porsche to
wow clients on lunch-hopping
sojourns across the city.
Whatever the vehicular
needs of your business (and
these could include bespoke
van shelving, fitted handsanitisers for employees or
LED interior lighting), Lex
your business and offer you control of your cashflow in the process
Autolease has a huge range of
cars and vans at its disposal.
As monthly lease payments
are generally cheaper than
repayments on a car loan, your
cashflow is likely to see
the benefit. Check out Lex
Autolease’s quote selector on
leasing4business.co.uk. There
are significant tax savings too
(you can claim back 100 per
cent of VAT if your vehicle is
used solely for business).
Then there’s the comfort
that comes with knowing that
you’ll be freed from the dayto-day angst of running your
choice of wheels. You can
drive a brand new car or van of
your choice, with optional
servicing and maintenance,
road tax, breakdown cover
and tyres included. The
company car is traditionally
known as ‘the prince of
perks’; vital for fostering staff
motivation and retention. But
with Alfa Romeos, Porsches
and Chrysler Jeeps all on
Lex Autolease’s roster,
employees could end up
driving a car that they never
thought was affordable
– all without any extra
costs to you.
The process is simple too.
Leasing a car from Lex
Autolease works like this:
you can get prices on
leasing4business.co.uk so all
directors need to do is choose
a vehicle, mileage and contract
period (usually two to five
years), and Lex Autolease
provides a quote. After credit
approval Lex Autolease will
order your vehicle and deliver
it to you. With optional
servicing and maintenance,
road tax, breakdown cover and
tyres, Lex Autolease can help
keep your company vehicle
on the road so you can
concentrate on running
your business.
In addition to hassle-free
motoring, there’s another
blessing: your company will
be a smart pioneer in the
sharing-economy revolution,
automatically joining the
countless millennials for
whom the idea of owning a car
is becoming passé.
www.leasingrevolution.com
NOVEMBER 2014 DIRECTOR 9
Business wisdom
How SME ownership off vvehicles is changing
Looking for cost-effective fleet solutions? Take a look at the stats that matter…
THE GEN-Y SHARING CRAZE
LIGHT COMMERCIAL VEHICLES ON BRITAIN’S ROADS:
millions registered
Why vehicle ownership is becoming a thing of the past…
340
90
330
56%
80
70
60
50
320
310
300
13%
40
30
20
290
280
270
260
10
250
2004
10
20
30
Age
40
50
2005
2006
2007
2008
2009
2010
2011
2012
2013
SOURCE: DEPARTMENT FOR TRANSPORT
60
AVERAGE CAPITAL COST OF COMPANY CAR in the year first contract taken out
(LIST PRICE LESS NEGOTIATED DISCOUNT)
NIELSEN GLOBAL SURVEY OF SHARE COMMUNITIES, 2014
£17,000
35%
High petrol/
diesel prices
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Director Business wisdom
27%
Price of vehicle
13%
Driving
experience
LEX AUTOLEASE REPORT, 2014
THE BIGGEST CONCERNS FOR SME OWNERS WHEN SELECTING A VEHICLE
£16,000
£16,818
£16,918
£16,908
2012
2013
£16,861
£16,232
2010
2011
2014
N O V E M B E R 2 0 1 4 D I R E C T O R 11
BASE: ALL CAR CONTRACT HIRE CONTRACTS ACROSS LEX
AUTOLEASE IN EACH YEAR. SOURCE: LEX AUTOLEASE
Percentage of UK people likely to rent from others
100