Vehicle leasing revs up as firms aim to cut costs

Kudos Vehicle Management, a contract hire and leasing firm based in Halifax, has seen a spike in demand as the poor state of the economy means small business customers shun big ticket motor purchases.

The family-run firm, set up by former semi-professional squash coach Russell Bowker more than 25 years ago, turned over £8.25m last year, up nearly 15 per cent, despite the Japanese tsunami hitting order times. Now it expects to grow by between 50 and 60 per cent over the next five years.

Mr Bowker, the managing director, said: “Phone traffic has shot up as businesses look at other credit lines.”

Kudos helps firms to choose a vehicle, arrange finance, organise servicing, maintenance and insurance. It was set up in 1984 and is a franchise of the British arm of Leaseplan, a fleet management giant which is part of Volkswagen and is spread across 30 countries.

Kudos works in a similar way to an insurance broker and has grown despite currently having only five staff, as improved technology meant it needed fewer people.

“We do all the analysis of the best way to find you value. It is very electronic and not labour intensive,” Mr Bowker said.

Over the last three years and particular in recent months the firm has seen a strong rise in the number of enquiries from individuals and small business clients, who see leasing a vehicle as a cost saving alternative to buying.

“Consumers are looking for funding lines and there has been a certain degree of pent-up demand where people have made postponed acquisitions. New vehicles are four or five years old and people are looking to change. We have not done any marketing but we still have this growth curve.”

The difficulty in obtaining bank credit, which has been a major problem since 2007, also means companies are approaching Kudos as an alternative to loans on cars and vans. Mr Bowker said in total the firm has seen a 45 per cent rise in enquiries over the last 15 months.

“At the end of 2008 when the economy ground to a halt and everybody put the brakes on there was a noticeable drop. It has been an upward curve since 2009. We know it is a fight but we are up for a fight.

“People want to tap into credit lines to finance their vehicles. If you are a carpenter or a joiner you will normally keep a van for four or five years. It would make sense to purchase the vehicle in that form. But if you have representatives on that road doing 25,000 miles a year it would make sense to lease them.”

The firm aims to be a one-stop shop for companies leasing vehicles.

“The small business man has no time to worry about his business and car.

“He has got different requirements and we make sure he gets what he needs without traipsing everywhere.

“In Yorkshire there does not seem to be the infrastructure to support the smaller businesses.”

The firm, which will move its base to Ripponden in September, had been affected however by the consequences of of the Japanese tsunami and earthquake which devastated homes and business in March.

“Manufacturers didn’t want to build up stock because of the (state of the) economy while some of the paints and paint pigment came from Japan – all those things have been affected.”

Wise words on why it pays to lease not buy

Kudos Vehicle Management has an agreement with Ford Ringways in Leeds and Farnells in Guiseley, which both supply a number of its vehicles.

The average price of Kudos’s vehicles is £20,000 but it also supplies far more expensive marques. It is currently working on plans for a £175,000 Mercedes which will be launched in November, Mr Bowker said.

The typical customer wants between one and 10 vehicles, he added.

Most of Kudos’ work comes from repeat business and referrals and many of its clients are those whose work takes them around the country, such as IT contractors.

The firm’s website features a quote from oil baron J.Paul Getty, one of the richest Americans to have lived, which sums up the attitude of its customers: “If it appreciates, buy it. If it depreciates, lease it.”