Newly-appointed Lombard boss Alex Baldock is sending a clear message to fleets - if you are not leasing your vehicles you may well be compounding the financial pressures resulting from today’s tough new economic climate.
Baldock, who moved from Barclays to become managing director of Lombard in July, says, “I am especially delighted to be joining Lombard and working alongside Head of Lombard Vehicle Management, Rob Bailey, at this particular time, Lombard is very much open for business and committed to finding ways of releasing cash. Leasing is a key means of achieving this.
“However, although many businesses lease vehicles, a substantial number either do not lease all the vehicles they might, or even still purchase outright. In addition, many have large numbers of drivers on a cash-for-car option, which is increasingly becoming more costly than providing an efficient fleet car on a lease. With vehicle fleets accounting for such a high proportion of business overheads, any of these policies will mean that a business is making life unnecessarily difficult for itself in worsening economic conditions.
“Leasing really comes into its own in difficult economic circumstances, especially where vehicles are concerned. It not only frees up capital at a time when the cost of funds is increasing but removes heavily depreciating assets from the balance sheet - at a time when residual values are in decline. A leasing company takes that growing and unpredictable risk on behalf of its customers, along with increases in peripherals like VED. By fixing the majority of costs, leasing provides valuable certainty at a time of increasing unknowns.
“Even if a business does not purchase outright but through contract purchase, the possibility of settling the balance at the end of the term and selling the vehicle at a handy profit is no longer realistic in a declining market, which negates one of the historically attractive aspects of a non-leasing option.
“And from next April the case for leasing will become even stronger. In place of the Expensive Car Leasing Disallowance reducing the tax deductibility for lease rentals on cars costing over £12,000 there will be a flat-rate disallowance of 15 per cent applied to vehicles emitting more than 160g/km of CO2. This will mean that cars which would typically have been better suited to a purchase product will now be more cost-effective on contract hire.
“The financial case for leasing is compelling” concludes Baldock.
Baldock is an experienced corporate financier. At Barclays he was most recently Commercial Director of Barclays Commercial Bank, running all the UK SME frontline sales and service teams. He has strong business management credentials having worked for 13 years as a management consultant at Bain & Company, Ernst & Young and Dentsu with a wide range of blue chip companies. He has also acted as senior strategy advisor at the BBC and to Shadow Chancellor Michael Portillo MP.
