A trend to move out of ageing company cars and into rolling short term leasing contracts has been reported by Equalease.
The company, one of just a handful of leasing companies that has developed three to twelve month car leases as a specialist product, says that it has recently gained several customers who have chosen to sell their existing four year old cars and opt instead for ongoing three month contract renewals.
Managing director Paul Ashton said: “This is very much a question of retaining flexibility. Companies that have been hanging onto cars beyond their standard replacement cycles during the recession have been doing so because they didn’t feel comfortable making the long term commitment of a new car.
“Existing, conventional company car choices – of buying a new car or leasing one over a four or five year contract – are seen as too much of an obligation.
“Short term leasing provides the means to take drivers out of older company cars that are approaching the end of their fleet life and move them into much newer vehicles but without the need to make any long term commitment.”
Ashton said that the companies moving towards this acquisition model tended to be smaller operations running less than a dozen vehicles.
He explained: “We believe that this trend is gaining ground in this sector first because short term leasing fits in well with SME thinking. The strength of a smaller company is usually its flexibility, its ability to react quickly to changing market conditions and short term leasing fits in with this approach to business.
“Of course, there is a premium of around 15-20% compared to leasing a vehicle on a long term contract but that is a price that these companies believe is worth paying to retain a high level of control over commitments.”
Vehicles provided by Equalease on 3-12 month leases are taken from its fleet of cars, all of which are less than two years old. Leases include a standard annual mileage allowance of 15,000 miles a year or 1,250 miles a month and include all maintenance, breakdown recovery and road fund licence.