Brexit

The current high degree of uncertainty around Brexit is causing vehicle manufacturers to re-think their sales strategy for the UK. There has been a wide-scale restriction of vehicle allocation volumes for sale into the rental marketplace. Manufacturers are diverting available volume to their more profitable retail and direct Corporate sales customers instead. Manufacturer investment in the UK over the last 2 years has dropped by over 80%. The current legal, customs, and logistics uncertainties driven by Brexit have made all manufacturers look at the UK very differently to the market 2 years ago. All manufacturers are restricting supply of imported vehicles into the UK in favour of other profitable countries where there is less uncertainty. This has massive impact on the rental industry, which has a fundamental demand for cost effective, consistent and smooth flowing supplies of new vehicle product. This major change in strategic direction presents the manufacturers with potential for an increased profitability opportunity. As well as a restriction of supply issue, the rental industry is facing a dramatic increase in vehicle holding costs, meaning that there will be a further squeeze on the marginal profitability that already exists within the rental industry.