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Car Leasing Take Over - Could Owning a Car Become a Thing of the Past?
posted on Jan 26 2015 by Kiri Nowak
According to Glass’s, the biggest vehicle data provider in Europe, buying cars could become a thing of the past. The next generation of potential car buyers are used to monthly subscriptions, opting to pay for a lot of goods on a monthly basis. Car leasing fits in this with model and enables people to set up a fixed monthly payment for a set amount of time.
People are more accustomed to monthly payments for all sorts of products, from mobile phones to car insurance and film subscription services such as Netflix. Rupert Ponton, head of valuations at Glass’s says ‘Consumers, especially the younger, 'direct debit generation' has become accustomed to buying a large range of often high-priced products and services on a pay monthly basis. Phones are the obvious example but there are many other sectors where this is now prevalent - from software to medical insurance and entertainment. Why not cars?’
Car leasing is also a very popular option for business customers who can see the benefits of leasing over buying when it comes to running a business. Business car lease deals can be offered at extremely appealing prices and business owners are quick to snap these deals up.
When it comes to leasing, people also tend to be very loyal. Most customers like the advantages of leasing and tend to continue leasing for a number of years. They are less likely to lease a car and then when their lease ends purchase a new car outright. ‘Once buyers start leasing, they tend to switch permanently. The chance of them opting to buy their next car, either outright or with a loan, is low.’
There are also numerous risks involved with buying, such as high depreciation costs with brand new cars, the risk of being scammed when buying a second hand car and concerns over things going wrong.
People seem to like the stability and predictability that car leasing offers. The leasing and rental industry is expected to grow in 2015 according to the BVRLA, the trade body for the rental and leasing sector. BVRLA chief executive Gerry Keaney said: ‘The industry performed well in 2014, with the association seeing a further increase in membership and fleet sizes across nearly all sectors.’
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