Tratitional Meg remains strong
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• Many sectors within the road transport industry still prefer to provide their own finance and own the asset, as a recent Barclays Mercantile survey into methods of funding capital equipment clearly shows. BM questioned 200 directors from a variety of UK industries including truck and bus operators and courier/parcels companies with the following results: 55% of transport company directors bought equipment for cash during the past quarter, rather than using iong-term funding such as HP or leasing. Some 66% of transport companies acquired vehicles in the past three months.
Among companies planning to acquire commercial vehicles over the next three months, the funding choice was: bank loan, 11%; overdraft, 18%; cash, 16%; hire purchase, 38%; leasing, 13%; contract hire, 1%; and finance from vendor, 2%. According to Barclays Mercantile's marketing manager David Owen, while the highest take-up of contract hire tends to be with own-account operators, "The convenience of contract hire is having more appeal with road hauliers and it also means that they're taking the risk of the value of the vehicle out of their business by going to contract hire or operating lease. "Because a vehicle is the core asset for hauliers then they'll be more educated in the range of options for them to finance them," he adds, "and therefore more likely to be aware of the advantages of contract hire—and hopefully from that more likely to use it.'
But Owen adds that bus companies "don't tend to use CH so much. They're more into straightforward leasing or HP, probably because they tend to have their own maintenance.'