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March 11, 2010
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Dennis DesRosiers discusses changes in the automotive landscape.
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Industry Insight
The New Normal
The automotive world has changed dramatically, affecting consumers and fleet buyers alike.
The 2009 PHH Arval Strategic Fleet Management Symposium, which took place in Mississauga, Ontario in June, featured presentations by some of the top minds on the Canadian automotive scene.
One of the most respected and well-known Canadian analysts and consultants, Dennis DesRosiers, offered keen insights into the future of the market with a focus on fleet.
“The difficulty in the fleet market is that there has been radical change with companies going bankrupt, a collapse of leasing, fundamental changes in how you finance, and other negatives,” DesRosiers said. “This hurts fleet because fleet too often is used as a safety valve—you have a problem, you dump it into the fleet market—and fleets have benefited from that.”
New normal
The automotive world has changed and DesRosiers believes this means the favourable pricing fleet buyers have enjoyed for years is going to disappear. “If you look out over the next two years, pricing has to be more aggressive. You can’t expect the vehicle companies to lose money and survive. That’s why they failed in the first place. So now they have to learn to make more money, and fleets are going to have to pay more for their vehicles.”
The good news is that most of the bad news is behind us and although fleet vehicles will cost more, DesRosiers says higher residual values might offset higher upfront costs. “We anticipate resale values going up and staying quite strong two to four years from now. So you may end up paying 2 to 4% more upfront, but you might get 2 to 4% more at the back end.”
Dennis DesRosiers discusses changes in the automotive landscape. (photo: Jack Kazmierski) | |
Jack Kazmierski