This year, Contracthireandleasing relaunched itself as Leasing.com, with the slogan ‘say goodbye to buying’. Paul Harrison, head of strategic partnerships at Leasing.com, speaks to Christopher Marchant about the effects of market forces on leasing, the ascendency of PCH, and how digitisation and leasing relate to the traditional dealership.
Mobility is undergoing a profound level of change, especially in urban areas through businesses akin to Uber or Zipcar.
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With the inherent ownership model under threat, Leasing.com’s Paul Harrison sees an important opportunity for the leasing model.
“Looking at the new mobility changes, leasing actually forms part of many of those new schemes that have emerged,” he notes. “For example, the subscription services that a number of motor manufacturers have launched are actually underpinned by leasing agreement. What is different about those services is that the lease is often over a much shorter period of time. Other add-on products such as insurance, maintenance or unlimited mileage, are also incorporated into a single subscription cost, which is obviously hugely convenient for consumers.”
Leasing.com offers BCH and PCH finance for new vehicles, and since 2016, PCH has overtaken hire purchase in terms of consumer popularity of finance options.
Harrison explains that his business regards these finance options as continuing an ascendancy, set against the still-very-popular PCP finance option.
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By GlobalData“In the new car market, PCP and PCH are very comparable, subject to the specific contributions that manufacturers, funders and dealers may decide to make,” he explains. “However, personal leasing is a more straightforward proposition for consumers, given there are no optional ownership rights or equity positions for them to consider as there are under PCP.
“In the used car market, I expect PCH to steadily grow in the coming years – albeit from a low base – where that product is appropriate to use, depending on the profile of the vehicle, with nearly-new vehicles as an ideal example.”
Not Just a Brand Switch
The original Contracthireandleasing.com was formed in 2000; as such, Harrison is aware of the legacy of using online services for vehicle leasing. The move to Leasing.com is more than a simple brand switch for the company: it is at the forefront of a digital overhaul aimed at capturing the ever-increasing popularity of the online business sphere.
Explaining the company’s wider digital changes, Harrison says: “Our new website includes a natural language search tool that is friendlier for people to interact with. We have also introduced some new sort orders across our site, which allow consumers to sort by the total cost of the lease agreement. They can also sort by the best value of that agreement.”
Given the ongoing difficulties in adapting to WLTP regulations, as well as the protracted negotiations involved in the UK’s planned departure from the EU, a turbulent year in the UK automotive industry can be predicted. Harrison says: “Assuming the ongoing supply of new cars into the UK remains stable, leasing does give consumers stability and fixed-cost motoring – even more so if maintenance and servicing are included. I expect that could be attractive to people in uncertain times.
“Tier leasing agreements are the most popular kinds of agreement in the marketplace, but it would be interesting to see if that changes to longer-term commitments – three- or four-year agreements in the event of economic instability, comparable to what can happen in the consumer mortgage market.”
Offering finance for contract hire on both a business and consumer level, Leasing.com is well placed to see the fluctuations in adoption of both options for adopters.
“Because of the increasingly punitive tax regime, I think many motorists that have the option to have a company car have opted to turn their backs on their employer’s company car scheme,” Harrison notes. “Instead, those motorists have taken the cash allowance and funded their car on a personal lease. I think that is undoubtedly one of the reasons for the growth in personal leasing in recent years, and I think that trend will continue in the short term at least.
“Away from company car drivers, the focus that personal leasing is now getting from manufacturers is on areas such as the subscription schemes we spoke about earlier,” he adds.
Harrison is approaching the market and Leasing.com’s future with positivity. Personal leasing finds itself in a strong position, and is a form of finance adaptable to a public that is increasingly confident with the ideal of pursuing finance online.
While no one can predict what the future holds, this remains an area of the industry with strength and potential.
