Summer has passed us by at lightning speed here at Wessex Fleet. As ever, it has been an event-packed quarter full of launches, celebrations and plenty of industry news to share with you.
Twenty Years in the Driving Seat
Earlier this month, on 6th September, we celebrated the 20th anniversary of Wessex Fleet, our parent company, with a sunset cruise aboard the Dorset Queen touring Poole Harbour. Thanks to the wonderful hospitality provided by Dorset Cruises, we had a fun-filled evening of food, drinks and dancing, while taking in the sights of Brownsea Island and its castle, as well as Sandbanks’ Millionaires Row.
Two decades ago, we pledged to grow our company by placing customer experience at the forefront of vehicle leasing and it has served us well. We’ve grown into a business spanning three different brands, employing over 40 people and supplying thousands of lease cars to drivers across the UK.
EV Drives an Evolution
We’ve been reflecting on all that has changed since we first began. Then, we were part of the transition from car ownership to usership and now once again we find ourselves at the epicentre of another seismic shift; from internal combustion engine (ICE) vehicles to electrified mobility. It isn’t without its stresses but every day we’re making new, safe, zero emission vehicles available to as many people and companies as possible, and that is an achievement we’re proud of.
In a happy coincidence, World EV Day greeted us on the other side of the weekend following our anniversary, marking the 5th year of driving change towards e-mobility across the globe. Just a few weeks previously in July, we launched our new Salary Sacrifice website, dedicated solely to leasing electric vehicles to employers and their employees. So it’s been a busy few months, with electrification firmly at the heart of so many of our activities.
Uptick Following Uncertainty
Q3 has been really interesting so far for us. The initial uncertainty following the election gave way to an uptick in orders, as the third quarter progressed. The fleet side of our business in particular has seen an increase in orders in July and August, largely driven by our new and existing clients in the higher education sector ordering electric vans and minibuses ready for the new academic year. Retail demand slowed in July and August, likely influenced by the Euros, the election, the Olympics and the school holidays. However we’ve seen a marked increase in enquiries since the last week in August.
Registrations are improving based on supply returning to normal since pre-Covid and for the first time since 2019, there have been one million sales achieved across the sector. We expect the uptick to continue into Q4 particularly with a push to register and deliver EV products.
Volatility Transitioning to EV
We are still seeing the sector struggling to juggle the transition to EV. Vehicle manufacturers must hit their Zero Emission Vehicle (ZEV) mandate, requiring them to sell a certain percentage of electric cars and vans each year, (this year it sits at 22%). However, at the same time the volatility of electric vehicle residual values is making this a challenge. There has been a considerable drop in battery electric vehicle residual values since August 2022, including a steep drop over the past year.
The vehicle manufacturers, (the OEMs), are being forced to offer ever increasing discounts on new electric cars to generate a rental that will motivate the uptake of EVs and this is particularly noticeable in the regulated space where the consumer doesn’t benefit from the company car tax breaks. Certainly some support for the used EV market to stimulate wider demand will be required, otherwise there could be a real danger OEMs may reduce the number of ICE vehicles they bring into the UK to achieve the ZEV mandate percentage targets.
Upswing in EV Consumer Interest
We have witnessed a continued upswing in EV interest from personal and business leasing customers but this has fallen short of mass adoption. What is really needed to ensure this takes place, is price parity between EV and ICE vehicles. Even in some cases where this is achieved, we still see some consumers opting for ICE largely due to charging or range anxiety. As the electric charging infrastructure becomes more and more ubiquitous, the scales are sure to tip in the not-too-distant future but we’re not quite there yet.
A Rocky Road for Funders
Many of the stellar offers this year have been on EV product. However, historic lease companies who were earlier adopters of EV saw their residuals tumble and are incurring significant losses on disposal. This has led to a reluctance to take on further new EV through uncompetitive pricing due to weak residual values. The new funders such as Drivalia, Alphabet, Santander, and Leasys have been less exposed previously so do still have an appetite to underwrite EV and have benefited from strong front end support from the manufacturers.
Insights for Q4 and Beyond
The push to register EVs before the year end will continue for those manufacturers behind their ZEV target and this could lead to some great opportunities for consumers. It wouldn’t be surprising to see pockets of vehicles available at 60% + discount. While this will of course be a great victory for consumers, there will need to be some adjustments of strategies in 2025 to build sustainability firmly into the heart of the pricing equation. When and how that will be achieved remains to be seen.
Xcite Doubling Resources
We have doubled our resource in the Xcite Procurement Team to enable us to stay close to the OEMs, working with them to help support their goals by ensuring that all vehicles but particularly EVs, are positioned correctly in the market from a pricing perspective, to prevent any imbalance in the market from occuring. Being able to act swiftly to secure batches of vehicles means we can continue to support manufacturers but at the same time bring our customers exclusive offers.
Top Leasing Tips for Q4 2024
Any driver looking to arrange a new lease soon should definitely consider an electric vehicle, particularly if some of the anticipated price drops hit before the year ends. EVs aren’t one size fits all but there are electric car deals to be had when leasing and some great tax incentives. Talk to our team and we’ll go through the pro and cons so we can work out together if an EV is right for you, both financially and practically.
Enjoyed this article? Read more of our latest blogs below:
- Best EVs in 2024
- How Do You Get a V5 with a Lease Car?
- World EV Day
- Do I Get a Warranty with a Car Lease?
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