THE characterful Roddy Graham – commercial director of the leasing company Leasedrive Velo – contacted me today with some predictions for the coming year.
Roddy’s company has been in the news recently – Leasedrive Velo has recently taken over all the leases for Masterlease which has just been bought by Investec. (If you are interested, you can read the official line here: Investec buys Masterlease.)
Now much of Roddy’s talk was very industry related, and of little relevance to small businesses.
But there were a couple of things that any SME owner should know.
The first of these was higher fuel pump prices, which will mean less business travel according to Roddy.
“From a high of $147 in July 2008 to a low of $37 a barrel at various times in 2009, the price of oil has risen steadily since with the odd downward exception, a fact which has has certainly been reflected at the pumps,” Roddy told me.
“Currently, oil is trading at $89 a barrel. An important price resistance band is $89 to $92. If the price rises above this, it is likely to climb further with many expecting it to be around $100 a barrel next year. This will be fuelled by worldwide demand, primarily driven by China, the world’s second largest economy after the USA. Inevitable high pump prices will lead to a squeeze on business travel where possible.”
However, it’s not all bad news. If there is going to be a squeeze on business travel, then Roddy believes there will be increasingly lower CO2 emission models – which means that, if nothing else, your fuel will go further, so offsetting some of the fuel increase.
“With a buying trend towards more fuel efficient and lower polluting cars, the most popular vehicles for our customers are proving to be those with CO2 emissions of 120g/km or less, employees taking advantage of the reduced Benefit in Kind (BIK) tax brackets,” explained Roddy.
In other words, these cars currently qualify for company car tax of either 10% or, if they are diesel, 13%: the savings are worth having. For example, the new Honda Jazz hybrid has CO2 emissions of 104g/km, so BIK is 10%: for a 40% tax payer, the monthly company car tax is just £53 a month. That’s hardly wage sapping, is it?
“No, that’s right,” agreed Roddy. “Business cars that offer under 120g/km tick all the right green boxes for both employers and employees by reducing the carbon footprint across the fleet, lowering fuel costs, and offering low tax business car motoring.”
However, if Roddy is correct about fuel prices – and let’s face it, fuel has only been going one way – any small business owner should start factoring such issues into their planning for next year.
What will be the best form of business travel? How can business car costs be lowered? These are important considerations to keep a lid on costs and keep profit in the bottom line.
Editor’s Blog on Roddy Graham’s predictions for 2011
