Thursday 26 November 2020

Brexit may prompt shift in HGV ownership models

Vehicle hire provider Dawsongroup has predicted that post-Brexit uncertainty and import tariffs could contribute to substantial growth in the rental and leasing sector, as hauliers reconsider traditional positions on truck ownership.

The company says it has already seen growth levels in rental enquiries of up to 75 per cent above the same period in the previous year, and that it expects this to continue.

Even allowing for the eleven-month transition period, 2020 is likely to see unpredictable freight volumes, and equally unpredictable new vehicle registrations, contends Mark Middleton, head of sales at Dawsongroup Truck and Trailer.

“Hauliers are caught in a perfect storm of economic uncertainty, and an infectious level of uncertainty and caution from freight owners,” he said.

“Although the last official figures showed a healthy increase in road freight, Q4 saw much anecdotal evidence of volumes softening across many sectors. And, of course, the cost of ownership of trucks is likely to increase substantially once the 16 per cent import tariffs are factored in.”

These factors, in addition to various regulatory pressures such as mandatory smart tachographs, clean air zones and the London ultra low emission zone, will impact on buying decisions across the market, Middleton believes.

“Traditionally smaller hauliers, with fewer than 30 vehicles, have preferred to buy HGVs rather than lease substantial portions of the fleet,”he continued.

Operating and finance leases have always been at their most popular with the major players in the market.

“However, that could now change. We think that all logistics companies might find that they are best placed working with a flexible model of ownership, which has the elasticity to meet their needs, allows them to manage credit lines and cash flow, and offers a measure of protection if the market is unexpectedly volatile.”

If the purported import tariffs are introduced, the cost of ownership could also change radically, says Middleton – meaning that the purchasing power of large buyers such as Dawsongroup will be more important than ever in controlling the overall cost of ownership for SMEs. Imports are also more costly, due to the pound being substantially down against the euro.

“If the price of imported vehicles increases by 16 per cent, and we have a weak pound, that could change the whole model for cost of ownership,” he suggests.

“Leasing and contract hire will become not only more affordable, but also more practical and protective than outright purchase.”

Dawsongroup bought more than 460 extra vehicles in Q3 and Q4 of 2019, over and above its normal acquisition cycle, a move it says is designed to protect its customers from any post-Brexit price spikes. It has also seen a 27 per cent growth in its contract hire business.

An executive briefing released by the company concludes that hauliers will require flexible and specialist vehicle acquisition partners, allowing them to flex assets in a range of ways and with a diverse selection of products.

Dawsongroup says its strength in vehicle provision is that, unlike many rental and leasing operations, it does not only produce standard and homogenous units, but also creates bespoke vehicle solutions and tailored contracts.

The briefing can be downloaded via the website.

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