Driveline’s business in many ways is a barometer for what’s happening in the small to SME sector as this forms 80% of our total business base with the balance being made up of a number of larger international corporates and private clients. We are fortunate that the large majority of our business is with repeat clients, which enables us to trend the market over the years and more accurately forecast the mood of the market going forward.
The Driveline barometer “DriveOmeter” reflects our client base and takes in to account many economic factors such as business confidence, performance, cashflow , debt levels and business owners positive or negative outlook for the future. If these factors are on the rise then the phone will be ringing at Driveline and vice versa.
We can also see trends in the types of vehicles requested and the new / used ratio. As we manage the whole process from vehicle sourcing, financing and specialist fit outs we have a ground floor view of which types of businesses are expanding and which are tightening their belts.
When times are tough Driveline’s client base leans towards rolling over existing lease and finance arrangements instead of replacing with new vehicles. A few years ago clients were reluctant to enter into new long term debt obligations and we saw our vehicle profiles go from 60% new / 40% used or ex lease and swing around completely to 60% used or ex lease / 40 % new. This reflected our clients need to save in all areas, including monthly lease rates and the dreaded FBT which is where used or ex lease vehicles have advantages.
The current outlook is cautiously confident as the economy continues to recover steadily from the “global economic crisis” rock bottom of 2007/2008. The government is forecasting “moderate growth” over the next 12-18 months and the Christchurch rebuild, growing consumer spend and an increase in incomes are all expected to contribute positively to the national GDP growth figures.
At Driveline we are certainly starting to see a steady upturn in business as confidence grows in the SME sector. The third quarter of 2013 has trended well for new vehicles and we’ve seen some business expansion amongst our clients particularly in the business to business services area.
Going forward I believe we will see continued steady growth for the next few years at least. New car sales are at their highest since 1986 and the real estate market is booming in Auckland which are both sure fire indicators of consumer confidence. Clearly people have been putting off big ticket purchases for a few years and feel now is the time to safely spend their money.
Lance Manins is managing director of Driveline and a vehicle finance specialist. He regularly talks to business groups and advises on the best way to structure finance solutions for vehicle leasing, fleet management and purchasing. For free independent advice or to book Lance to talk at your business group contact him at email@example.com or mobile 021 650-659.