Here we are again, rounding up another successful year! It’s been the 20th year in business for our parent company Wessex Fleet and we’ve had unprecedented success, gaining 2 sizeable new contracts which will undoubtably initiate a new phase of growth for our business. But what’s happened in the leasing industry in 2024 and what will the leasing sector bring customers in 2025?
Commission disclosure upheaval
Commission disclosure affects all credit agreements where a third party was involved, and a commission was paid. Commission disclosure's seen a major development in 2024. On 25th October, the court of appeal ruled in 3 combined motor finance commission cases that car dealers acting as credit brokers for customers must fulfil both a fiduciary duty and a duty of impartiality in their role as credit brokers. We’re now required by law to disclose not just the existence and nature of commission but also the amount. We must also ensure that all customers explicitly sign consent to say they’re aware of the amount of commission and are happy to proceed with a finance application.
Although we’ve had to adapt to a new process from our finance partners and implement internal changes, we’ve found ourselves ahead of the game having already built principles into our business around price, fair value and treating customers fairly. This has stood us in good stead and the changes have been well received by our clients.
ZEV mandate push back
There seems to be some resistance from manufacturers in general that the government’s target of 2030 and the corresponding ZEV mandate is unrealistic. The mandate sets a target as a percentage of a vehicle manufacturer's total annual sales to transition to zero tailpipe emissions. We’ve just seen Vauxhall announce it’s closing its Luton plant, which was going to produce electric vans, and just recently Nissan has announced it’s losing significant sums of money and without financial support, may not be here in 12 months’ time. These are very worrying times for some of the established diesel and petrol manufacturers particularly. The penalties imposed for not hitting the target on electric vehicles (EVs) are extremely high and some will find it difficult to survive the next few years. This will pave the way for low cost Chinese EV entrants, who the established manufacturers will find it very hard to compete with, especially in the small mass market car sector.
Leasing discounts increase
2024 has seen car leasing prices stabilising and discounts returning as supply has reverted back to pre-pandemic levels, which in turn has meant consumers have once again been able to take advantage of lower monthly lease payments. Most manufacturers are now back to pre-Covid lead times and transportation delays have eased.
The only caveat has been around EV where the residual values are still experiencing volatility, which despite heavy discounts has led to monthly rentals in many cases increasing as we have moved through 2024. However, as 2024 has neared a close, we’ve started to see the residuals for EV bottom out and stabilise, which should mean as we move into 2025 we can all be more confident in EV pricing.
Onwards to leasing in 2025
Though nothing’s ever guaranteed, the UK economy appears to be in a stable position, relatively speaking, although there are strong headwinds coming as businesses grapple with the rising costs of employment. This could impact growth in the leasing sector as businesses look to reduce expenditure on investment and recruitment. Interest rates will hopefully gradually fall, but not as quickly as we initially hoped, since they’ll likely be held up due to the inflationary pressures around increased pay.
Political instability across the globe could impact the UK and any uncertainly always equates to slower consumer and business demand. In summary, 2025 could be a challenging year but as a business we’ll focus, as ever, on doing the best we can with what’s in our control.
Spencer’s top leasing tips for 2025
Xcite’s Director, Spencer Blake, oversees sales, marketing and customer services. As one of our founding directors, his decades of experience, coupled with day-to-day involvement, give him a unique perspective when it comes to consumer demand and leasing insight.
Spencer says: “Excess supply always creates opportunities and if the price is right, consumer demand will be strong. 2025 is a time for us to really utilise our relationships with the funders and manufacturers to help secure competitive lease offers for our customers.
“I think new entrants into the EV market will also create opportunities, provided that consumers perceive the quality and value in their products.”