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2017 : Fleet Outlook

Written by | Posted on 01.01.2017
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LeasePlan UK reflection

Here we review some of the most significant recent developments that will surely affect vehicle fleets in 2017.

THE GROWTH OF LEASING

Let’s begin with a particularly encouraging trend. The number of vehicles being bought into fleets is rising and rising. According to the Society of Motor Manufacturers and Traders, 1.28 million new cars were registered for fleets in the first 11 months of 2016 – a 5.3% increase on the same period last year. Fleets accounted for 51% of all new car registrations in 2016.

This is obviously good news for those of us in the leasing industry, but it also presents a challenge: can growth be sustained in 2017?

FUEL PRICES

At the beginning of 2016, fuel prices were one of the biggest stories in town. The cost of oil had fallen such that pump prices were the lowest they had been for over six years. Motorists could buy petrol or diesel for around £1 a litre.

Did this happy situation continue? Sadly not. Oil prices began to rise again, bringing fuel prices with them. A litre of unleaded now costs 12p more than it did at the start of the year. A litre of diesel is 11p higher.

And there’s been another effect too: the EU Referendum. Soon after the vote, Sterling plunged to a 31-year low against the dollar – which, given that crude is traded in dollars, puts British buyers at a disadvantage. They can’t get as much oil for their money. And that, in turn, has put upwards pressure on the prices that we consumers pay at the pump.

These factors are likely to continue into 2017. In fact, the Chancellor of the Exchequer himself, when explaining his recent decision to freeze Fuel Duty for another year, referred to ‘significant pressure on prices at the pump here in Britain.’ He’s clearly of the mind that British drivers need a bit of support.

SALARY SACRIFICE

Another of Philip Hammond’s big announcements concerned Salary Sacrifice schemes. We’ve already detailed the changes in our briefing on the Autumn Statement, as well as in blog-posts, but here’s the short version.

As of April 2017, Income Tax (for the employee) and National Insurance Contributions (for the employer) will be levied on employee benefits gained through Salary Sacrifice schemes – including cars.

However, there are some important exceptions. Those employees who already have a car through Salary Sacrifice will not be hit by the changes until April 2021. And ultra-low emission vehicles (ULEVs) – those emitting less than 75 gCO2/km – will also be exempt.

As we’ve said before, at the time of the announcement these changes were disappointing for the fleet industry ­– but now it’s time to deal with them. We shouldn’t wait until April 2017 to think about the implications. That work has to happen now.

CLEANER & GREENER

ULEVs have been one of the great success stories of 2016. According to the latest statistics from the SMMT, 82,640 electric vehicles were registered in the first 11 months of the year, which is a 23% increase on the equivalent period from 2015.

A number of policy developments are pushing this growth along. Aside from exempting them from the Salary Sacrifice changes in his Autumn Statement, Hammond also outlined a new system of Company Car Tax for 2020-21 that will incentivise ULEVs even more than the current system does. This built on various schemes that his predecessor, George Osborne, introduced before his departure from Number 11 in July.

But the most notable environmental policy of the year didn’t come out of national Government. One of the first acts of the new Mayor of London, Sadiq Khan, was to accelerate and expand plans for an Ultra-Low Emission Zone in the capital. That will take effect in 2019, but Khan also intends to introduce an ‘Emissions Surcharge’ for the most polluting vehicles travelling through the current Congestion Charge Zone from October 2017 onwards.

The upshot is that the rise of ULEVs will continue in 2017 and beyond. Not only are the vehicles themselves becoming cheaper, more practical and more desirable, but the politicians are backing them too. Fleets should certainly give them due consideration.

GOING DRIVERLESS

The technology of motoring is changing in extraordinary ways. We’ve already mentioned ULEVs, but there’s also the prospect that driverless cars will be on our roads in the near future – perhaps even as soon as 2017.

After all, the requisite policy is already being put in place. As we reported at the time of the Queen’s Speech in May, the Government has brought forward legislation that will in turn bring forward our driverless future. It has also announced that tests of self-driving vehicles will begin next year.

The tech giants are, of course, playing their part too. Tesla recently revealed that all of their new models are being fitted with the hardware necessary for fully autonomous motoring, or something close to it. All that’s required is a software update that’s expected within months.

And Uber has already begun offering driverless taxi rides round Pittsburgh, and is now working on driverless trucking around America. It can’t be too long before these innovations are brought to Britain.

This is an exciting time for motoring, as well as an uncertain one. If 2016 taught us anything, it’s that the future is hard to predict. But whatever happens in 2017, we’ll be covering everything that matters to the fleet industry  here – and to make sure you don’t miss a thing sign up to receive LeasePlan’s Fleet Insights delivered direct to your inbox.

 


 

For further information please speak to your LeasePlan Account Manager or contact a member of the LeasePlan New Business team on:

Tel: 01753 802 098 
Email: newbusiness@leaseplan.co.uk

 

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