How will the leasing and rental market fare in 2017?

Date: Friday, March 24, 2017   |  

Recently, the light commercial vehicle rental and leasing market has seen some significant changes, none more so than in the past 12 months or so. But what does this mean for 2017? What sort of trends are we likely to see?

One body that’s bullish about the market’s prospects for 2017 is the British Vehicle Rental and Leasing Association (BVRLA). Gerry Keaney, the industry association’s managing director, is predicting a 10% growth year-on-year in 2017 compared with 2016. This will, according to Keaney, “be largely driven by the continued growth of online retailing and the trend for companies to downsize from small HGVs and reduce their compliance burden”.

Leigh-Ann English, director at rental firm Fourways Vehicle Solutions, also has high hopes for 2017, despite the uncertainty that the market faces over the next 12 months, saying “we are seeing more operators turn to vehicle rental due to the flexibility offered by this option. Fleets can upscale quickly without the need to commit to long-term leases.”

Some rental firms are less optimistic, however, with Dawsons Rental, in particular, expecting something of a slowdown, after a less-stellar-than-usual last quarter of 2016. Simon Ridley, the company’s vans managing director, says: “While new registrations indicated growth on the back of a four million (rental and leasing) asset market, there was a slowdown in the market towards the back end of 2016.”

Seasonal peaks

The proliferation of internet shopping, as well as pre-ordained shopping bonanzas, such as Christmas and ‘Black Friday’ (which usually falls in the late autumn, in the aftermath of Thanksgiving), mean that, on occasion, delivery fleets, especially, are required to expand their fleets temporarily.

However, it makes little or no financial sense to take out long-term deals on new vans, when delivery companies can either hire owner-drivers to cover the ‘last-mile’ delivery needs on a short-term basis or take out short-term leases or rent vans from rental companies.

According to, Dawsons, however, 2016’s market spike – although still apparent – was less pronounced than at the same time in 2015. Ridley tells What Van?: “There was less of a spike this Christmas [2016] versus the previous year. It started to grow at the same level, but less dramatically, and then started to decline in 2016. This is in contrast to previous years, where historically it would normally be expected to continue to grow.”

Delivery companies need to be careful about owner-drivers, however, according to Europcar UK specialist vehicle director Stuart Russell, who argues that they could “create an unregulated method for the delivery of goods, where drivers may be using older vehicles. A van rental could provide a solution if logistics firms were wanted to take more control over the final journey.”

He goes on to say that LCV rental companies need to manage their fleets more creatively to help them to survive the fallow period between the pre-Christmas Eve boom and the return of the corporate sector in January.

What impact will the Euro6 emissions regulations have on the sector? One of the biggest changes is the proliferation of the need for LCVs to have their AdBlue reservoir topped up on a regular basis, especially with the quantity of miles rental and leasing LCVs tend to clock up. Indeed, Ridley goes so far as to say: “It represents the biggest single change that the LCV market has seen for several years.”

While the environmental benefits of AdBlue (and the accompanying Euro6 engines) are well documented, there’s no doubting that there are some issues that require operators’ attention.

As Ridley explains: “AdBlue is expensive, needs to regularly be topped up and has varying impacts should the asset not be maintained correctly, which range from downtime and call-out fees through to complete DPF (diesel-particulate filter) failure, which could run into thousands.”

There could also be issues when it comes to topping up the stuff so critical to the proper running of Euro6-compliant diesel engines. Russell says that Europcar recommends that filling-up with AdBlue should only ever be done by a trained technician because “AdBlue is corrosive”.

Fluctuations in the economy are also likely to affect the leasing and rental market going forward. This is especially pertinent right now with the full impact of the UK’s decision to leave the EU still not entirely apparent and with political instability all over the world fuelling concerns over the state of the UK’s economy. Indeed, Ridley opines that the state of the LCV market is a reliable barometer for the general state of the economy.

Unsurprisingly, the BVRLA expects the leasing and rental industry to remain fairly strong, even in the face of economic instability, saying that van rental is, according to Keaney, “popular in every economic climate, providing companies with the flexibility to downsize in a recession or upsize at short notice as conditions improve”.

Ridley agrees with Keaney on this, saying: “In times of austerity this stimulates the need for flexibility, and in times of prosperity many still elect to operate flexible rental, albeit to a lesser extent.”

These thoughts are echoed by English who, despite the various forthcoming challenges the economy is likely to face, claims the rental sector can thrive, saying: “In times of economic uncertainly the rental sector can benefit.”

With more regulations arriving that cover 3.5t-and-above LCVs, it would appear that smaller, lighter vans are likely to be in vogue among renters and leasers this year. According to Dawsons’ Ridley, there will be less demand for long-wheelbase vans, with customers more likely to focus on mid-sized vans and smaller models.

Russell agrees, saying his company is “expecting to see greater demand in short-wheelbase vehicles”. He goes on to conclude that specialist bodystyles are likely to be increasing in popularity in 2017, too: “We are seeing significant growth in the rental of specialist vehicles such as tippers, dropsides, crew cabs and pick-ups, driven by the need for a fast, efficient and flexible solution to vehicle sourcing.”

English of Fourways Vehicle Solutions agrees, saying that although car-derived vans are still the company’s most popular options, specialist bodystyles are in demand, including automatic and low-loader Luton-bodied vans.

One area in which she disagrees, however, is that Fourways is actually seeing an increase in demand for long-wheelbase vans and that the firm was “adjusting our own fleet as well as our wide supplier base accordingly” in order to meet these demands.

Pop-up repair

Over the past 18 months or so, Dawsons has broken new ground with its Portable Auto Centres (PACs). Essentially, these are ‘pop-up’ repair centres that are quick and cheap to build, easy to maintain and they have, according to Ridley, played a major part in reducing vehicle downtime and, naturally, maintenance costs.

“Even though we have on-rent growth of 56% over the last three years, our damaged assets as a percentage of fleet is still below 2%. This includes total loss and write-off, with an average of just nine days off road. These stats have improved year-on-year [since the PACs’ introduction].”


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