It’s safe to say that everyone wants the end of this year to be very different to the beginning. If the vaccination programme is as successful as we hope, it could be that 2021 will be the year of the recovery as well as the second year of the pandemic. For fleets, this means another year of challenges, but also of opportunities. These are the five trends we think could be key over the coming months, along with our predictions for the Spring Budget.
In September last year, electric vehicle sales overtook diesel for the first time – and they look set to boom in 2021. Our 2020 Mobility Insights Report suggests that two in five (42%) people in the UK are now more likely to switch to a zero-emission electric vehicle to reduce their own carbon footprint. Plus, with the 2030 ban on new ICE vehicles, fleets are having to start thinking about switching to electric. Acting now means more time to get it right. The good news is that there are fewer and fewer reasons not to make the move. Price, range and choice are all improving and even infrastructure is starting to catch up. It’s not there yet, but initiatives like Global ChargeUpNow, which demands universal EV charging infrastructure, can help put motorists’ (and employers’) minds at ease.
2. We have (some) certainty about Brexit
Brexit negotiations went to the wire and the uncertainty was a big concern for companies and fleets. Fortunately, an agreement was reached, so fleets and motorists won’t be subject for higher sticker prices in the short term. There are questions over the implications of country-of-origin rules in a few years’ time, but we have the buffer needed to prepare for tariffs.
3. Cars still matter
Many people enjoyed more time with family and less time in traffic last year, as they were on furlough or working from home. This led to an awareness that things can be different and is helping to drive debates about city transport, congestion, emissions and commutes – as well as questions about whether cars are still important to people. While remote working looks set to continue this year, at some point the world will start moving again. Cycle lanes and public transport will play a role (and, hopefully, will receive funding to improve), but our Mobility Insights research suggests that the majority of people prefer the safety and comfort of their own vehicle. Cars still matter – and people still want them.
4. Time for telematics
One side effect of the pandemic in general, and lockdowns in particular, is that it helped many fleet managers see what really matters to their businesses. We think they will want to take this even further – and telematics is the way to do it. It can help fleet managers understand where their vehicles are and when, so they can rationalise which vehicles are part of the mission critical fleet and which are additional extras. Fewer surplus vehicles means less time spent on maintenance and admin, leaving fleet managers with more time to dedicate to progression and efficiency.
5. Flexibility is in demand
The future remains very unclear and economic challenges may follow the end of the pandemic. Companies can’t afford to sit on the side lines, though, so we think they will turn to more flexible contracts. Our research found that four-fifths of fleet managers think a flexible vehicle leasing option would help their organisation handle unpredictable changes. Products such as LeasePlan Flexible and LeasePlan Confident are the right ideas at the right time to give fleet managers the flexibility they need to meet the challenges of 2021 and beyond. Similarly, drivers are looking for improved flexibility and convenience, so Cars-as-a-Service products are likely to rise in popularity. They give drivers immediate access to vehicles on demand without the need for outright ownership.
Spring Budget predictions
The Chancellor of the Exchequer, Rishi Sunak, has announced that the government will publish the Budget on Wednesday 3 March 2021.
Despite a £20 million funding pledge to increase the number of EV charge points across the UK, it’s likely that grants of £350 for installing a charge point previously available to hybrid drivers will be stopped. The government has been cutting back on hybrid grants for some time now, but as of April this year we expect that all incentives will be removed.
Also important is that from April 2021, businesses that lease their vehicles will be subject to a 50g/km permanent leasing disallowance threshold for all contracts in to from this date.
Finally, we expect 2021 to be the year of consultations as the government starts to get back to business as usual. There’s been a lot of noise made about road user pricing, so it’s worth keeping a close eye on this.
NB: The Office for Low Emission Vehicles is now called Office for Zero Emission Vehicles.
Matthew Walters, Head of Consultancy and Customer Data Services at LeasePlan UK