THE first ever survey of vehicle leasing brokers suggests good times ahead for the sector with 87% of brokers reporting a buoyant market with demand for car leases or other financial products on the up as SMEs, corporates and private buyers take advantage of low car lease rates.
Conducted by the Leasing Broker Federation, an independent membership organisation that supports leasing brokers across the UK, the Leasing Broker Attitude Survey shows that brokers appear bullish about their future prospects.
What are the key changes in demand for broker financial products and services?
- Personal Contract Hire – up 86%
- Contract hire – up 66%
- Finance lease – up 47%
- Maintenance – up 42%
- Short-term leases – up 32%
- Personal Contract Purchase (PCP) – up 32%
Table shows reported increases in demand. Source: Leasing Broker Attitude Survey 2016.
Driving the growth is an increase in personal contract hire (PCH), which is closing the gap on contract hire as the most popular leasing option.
While respondents reported healthy levels of demand for financial products, up more than 25% on average in the past year, 86% had seen a growth in personal contract hire, with the same number expecting further growth in the forthcoming 12 months. Contract hire is expected to grow by 71% in the year ahead.
Contract hire, personal contract hire and finance lease remain the pervasive products on offer from leasing brokers, but their clients were increasingly looking for a wide range of additional services, such as maintenance, short term lease, fleet management as well as some surprises including risk management solutions, mobility solutions, and even legal services.
Colin Tourick, author of the Report, said: “Brokers remain optimistic about demand for their services. Almost all believe they have a sound long-term future, especially in their core areas of contract hire and finance leasing but interestingly the recent move towards personal contract hire or purchasing is now making major inroads into this sector.
“However, clearly there is scope for more brokers to broaden the range of services they offer their clients. With nearly 50% reporting that clients already had a good or in-depth working knowledge of leasing – and demanding greater flexibility in product offerings – suggests demand for these products is expected to increase, along with maintenance and more flexible short-term leases.”
What is seen as increasingly important to the broker proposition is customer service – it’s considered the greatest potential stumbling block to broker success, but also the greatest strength in the broker proposition, followed by market knowledge, consultative approach, the spread of funders and price.
Gaining Financial Conduct Authority compliance was also a key issue for brokers last year with most brokers having found that FCA regulation had improved their business.
Tourick, Professor of Automotive Management, University of Buckingham, added: “The leasing broker channel is a vibrant sector of the market, and after delivering record returns in 2015, brokers look poised to expand their market presence further by offering enhanced professional services as well as moving into areas that have traditionally been the preserve of leasing companies.”
The Leasing Broker Federation was launched in January 2015 as the Small Fleet Leasing Federation, before rebranding to the Leasing Broker Federation in January 2016 to recognise the increasing influence of the channel on the new car and new van markets.
To chart the progress of this success, the Leasing Broker Federation conducted a survey of its members to find out where the growth is coming from, what the present looks like, and how brokers see the future of their sector.
For more information on the Leasing Broker Attitude Survey, go to Personal Contract Hire drives bullish outlook for brokers
- The Leasing Broker Attitude Survey was conducted in Q3 & Q4 of 2015 among members of the Leasing Broker Federation, who represent the full spectrum of brokers. Lead author of the Broker Attitude Survey is Colin Tourick, Professor of Automotive Management, University of Buckingham. The co-author is Ralph Morton, editorial director of Business Car Manager. The cost of the survey is £595 + VAT.
- The survey and the report on its findings were written before the BREXIT vote was taken.