PAN-EUROPEAN RENTAL RATES CONTINUE TO RISE, DESPITE GROWING CONFIDENCE IN FORECASTED RESIDUAL VALUES

Vehicle rental rates have risen across Europe over the last 12 months even though confidence in the future used car market continues to improve.

The latest experteye European Leasing Index report which tracks forecasted residual values, maintenance costs and rental rates in six European countries using data supplied by major leasing companies in each market, shows that Germany is the only nation to have seen a drop in its rental prices with vehicle leasing in all other countries becoming more expensive.

Of the six countries surveyed, it is UK fleet customers that have suffered the largest price increase during the course of the past year with a +5.5% rise in average rental rates, France seeing the 2^nd largest increase at +3.1%, Italy at +2.9%, Spain  +2.1%, Portugal +1.2% and only German customers enjoying a reduction in rates of -4.2%.

With forecasted residual values strengthening in all of the nations surveyed, some fleet operators may question why overall rental rates have increased. However, SMR (Service, maintenance and repair) budgets have increased across 5 countries over the last 12 months (Germany being the exception again) and new car prices have also risen.

France: Over the last 12 months, French confidence in the future used vehicle market has been high with a +7.8% rise in forecasted residual values. This has settled in 2011 and in the last quarter there has been a nominal -0.1% reduction. SMR rates have been very stable with very little change in the last 12 months (+0.3%) and only a -0.7% movement during the last 3 months. French leasing customers, however, have seen the 2^nd highest price increase with a +3.1% rise in rental rates over the course of the year, although rates have come down by -1.6% since April 2011.

Germany: Of the 6 nations surveyed, German leasing customers are the only ones to have seen a reduction in average fleet rentals over the past 12 months with a -4.2% reduction. This trend continues with a -2.0% drop in rates over the last quarter, however Portugal has seen a greater reduction in recent months with a -4.0% drop. Market confidence appears strong in Germany with a +4.9% increase in forecasted residual values over the year, settling to a +0.1% rise since April 2011. Budgeted SMR rates have seen the largest reduction with a -2.2% reduction during the last 12 months and a -0.8% reduction since April 2011.

Italy: With a +6.5% rise in forecasted residual values over the year, confidence in the future used vehicle market is strong in Italy; this continuing with a +4.3% increase in the last quarter. However this has been counterbalanced with the 2^nd highest increase in SMR budgets of the nations surveyed over the last 12 months (+3.4%) and a steep +9.0% rise in current new car prices. Rental rates in Italy have therefore risen by +2.9% over the past year and have risen by +2.0% since April 2011.

Portugal: Whilst seeing a +1.6% rise in forecasted RV’s over the last 12 months, Portugal is the least confident in the
future used vehicle market of the 6 nations surveyed.  This is reflected in their quarterly figures which show a -2.9% drop in forecasted RV’s since April 2011. Portuguese SMR budgets have risen sharply in the last quarter with a +5.2% increase, the highest of all nations surveyed, although during the course of the year the rise has been a relatively stable +1.3%. Portuguese customers have, nevertheless, seen a -4.0% drop in their average rental rates during the last quarter, but a +1.2% increase over the last 12 months.

Spain: Spain tops the league table in terms of its confidence in the future used vehicle market with a +8.3% rise in forecasted RVs during the last 12 months. This has settled in the last quarter at +0.3% with Italy and the UK showing more optimism. Over the course of the year, Spain also reports the highest increase in SMR budgets with a +4.2% rise settling to a -0.4% reduction in the last quarter. Spanish customers have seen the greatest hike in rental rates in the last 3 months with a +5.9% increase, with a +2.1% rise across the course of the year.

The UK: At +4.3% in the last quarter, the UK sits alongside Italy at the top of the survey in terms of its confidence in the future used vehicle market, although during the last 12 months the UK has only seen a +2.8% overall increase. During the course of the year, UK fleet customers have suffered the most with a +5.5% rise in rental rates, the highest of all nations surveyed, although there has been a very slight -0.6% drop in average rates since April 2011. SMR budgets have not moved in the last quarter, however during the course of the year they are up by +1.6%.

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Notes.

• The comparisons are for vehicles with a contract duration of 36 months / 90,000 KM with the exception of Portugal (48 Months / 120,000 KM)
• Twelve month comparisons show change since June 2010.
• Three month comparisons show change since April 2011.
• Rental rate changes compare the rates in effect at the time of the survey with those in effect three or twelve months ago.
• RV and smr changes show the change in participating leasing companies' forecasts of residual values and maintenance costs over the period.