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Medium term lease renewal rates double during recession

The number of medium term leases that are being renewed on a rolling basis has double during the recession, according to medium term leasing comapny Equalease.

The company says that a year ago rolling three and six month leases represented 28% of its business but now the percentage was closer to 57%.

Managing director Paul Ashton said: “Looking behind the figures, anecdotal evidence suggests that the increase has been caused by two factors.

“One is that the employers have been using rolling medium term leases as a way of postponing the decision to buy or long-term lease a new car until their business prospects become clearer. We have seen customers following this strategy for both existing employees and new recruits.

“The second is that we now have some customers, especially SMEs, who are using medium term leasing as their primary source of fleet acquisition. They are happy to pay the slight premium over a traditional three-four year lease in order to retain the high degree of flexibility that medium term leasing brings.”

Ashton said the shift towards ongoing, rolling leases had transformed Equalease’s standard customer profile for medium-term leasing.

He said: “Before the recession, the majority of our cars went to three key customer groups - new employees on probation, to those who were waiting for a new car with a long build time, or to people who liked to change their vehicle regularly and were happy to pay a premium to ‘lifestyle’ lease.

“Now, we are operating much more at the sharp end of the fleet market where acquisition decisions are being driven almost entirely by financial factors.”

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