Two of the most commonly asked questions by customers when enquiring about any of leasing are: ‘Will I have any equity at the end of my agreement?’ and ‘Is the final payment that has been set fair and reasonable?’ Whilst no guarantees can be made on what happens with the used vehicle market, there is real cause for optimism in the UK economy at the minute, and as a result, a huge uplift in demand from business users who are looking to lease a vehicle. This has not always been the case in the last 18 months, with the new car market being hit harder than most. Total sales have fallen more than 40% and the commercial vehicle sector has been hit even harder. Large corporate customers had been retaining their current fleet, daily car rental companies were cancelling renewals en-masse and both private customers and small business users were holding on to their current vehicle for longer. But that tide has begun to turn. The combined effect of these actions meant that used car dealers were starved of the steady supply of good 3 year old part exchange stock that they had previously enjoyed. The Good News As a result, the trend of falling used car residuals seen in the second half of 2011 has been reversed and while they are not yet as strong as at the end of 2010, demand is high and auction houses across the country are reporting strong performance in certain sectors particularly in the used double cab market. A combination of interest rate reductions, the lower VAT rate and the effects of the extension of the Scrappage scheme have gone some way to reverse the fall in new vehicle sales. Positive economic data, rising business and consumer confidence will also further serve to increase the momentum in new car sales figures. It will take some time before sales are back to the exceptional peaks of 2006 and 2007. The days of ‘stack ‘em high and sell ‘em cheap’ are likely to be over. What happened in the last few years was a wakeup call to vehicle manufacturers and dealers alike. Car makers who had reduced and in some cases ceased production are now manufacturing again but are taking a much more cautious approach to avoid being in the same position they were in last year, where too much supply coupled with reduced demand resulted in loss making businesses. As we’ve stated, we can’t guarantee what the future holds but it is clear from all the data available that the used vehicle market will continue to remain in shorter supply and as a result, used vehicle values and wholesale demand will continue to remain strong. It is a fair assumption that if the new vehicle market is 40% down this year, the supply of used 3 yr old vehicles will be down by the same figure. About the Author Robert Dadzie is the business manager at Vanarama Manchester West. Vanarama Manchester West part of the Autorama Group, is a leading provider of commercial vehicle leasing in the Greater Manchester Region. For further information on leasing or to obtain a quote, please visit www.vanaramamanchesterwest.co.uk Alternatively you can contact Robert Dadzie on 0161 401 0541 or email [email protected]