This is the time of the quarter where we speculate, pontificate and procrastinate and then offer opinions, often based on what we would like to see, rather than reflecting on the situation in the world, and often what follows the next quarter is close to a carbon copy of the previous, save one or two surprises and a few disappointments.
However, at present we have a weak currency, high inflation and probably high interest rates which all suggest higher costs, and certainly we will see this on personal leases/PCP as the rate on interest increases. The £35000 car someone is driving has to be purchased and financed by someone and if the rate of interest is 3 or 4% higher, that’s an extra £1050-1400 a year extra, typically £100 more a month to find. With Motability, a lot will depend on their balance sheet. Do they have “cash” in the bank, or are the deals financed, albeit at favourable rates, as the loans are basically government backed, in the form of “guaranteed” DWP payments. There is another but, the cost of Government borrowing has increased too.
When taking into account ongoing supply issues, car makers veering towards larger and premium trims, with the days of mass producing unlikely to return, and discounts much harder to come by, it does suggest an upward trend in AP’s. As to the numbers, I would imagine they will be more or less where they are now, possibly a little higher, and going forward I would expect to see, broadly, the same manufacturers that have offerings now. I think, and I hope I am wrong, we are unlikely to see the likes of Mercedes and BMW and probably Volvo returning any time soon, and when or if they do, it’s likely to be the lowest spec and lowest powered models which make it back.
Now of course, it appears Motability will have the benefit of a 10% increase in allowances from next April, which could offset AP increases but with inflation forecasts of 2% being banded around for 2024/2025, their planning and price calculations are based on a 3/5 year cost model. Add into the mix recent electricity price increases, the industry will know in a few months the effect on new, and crucially, second hand electric prices. Anyone trying to make calculations and plan ahead will be doing so with a large pinch of salt and given Motability’s prudence, or cautiousness, I have a feeling they’ll take a slightly pessimistic view.
Anyway, come Saturday, all will be revealed.