FVL Forecast Tsunami to Hit the Car Leasing Industry

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First Vehicle Leasing explore the potential disruption to the Car Leasing industry and Motor Trade, caused by the devastating Earthquake & Tsunami which hit Japan a month ago.

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Consumers won’t take delivery of a vehicle without a CD player, just because there is a delay in parts.

It might not seem like a topic which is relevant to the car leasing industry, however, while the waters which devastated parts of Japan recently may have receded, only now is it becoming apparent that the knock-on effects for world business could be much greater than first thought. Looking at the First Vehicle Leasing stock list, business appears to be on the up after the financial difficulties of the last two years, but there could be a storm on the horizon:

It's hard to think that our cars are made from lots of smaller components, all manufactured in different factories then brought together in one production line. Take the Nissan Qashqai for example – it’s built in Nissan’s Sunderland Plant, isn’t it? It may be put together there, but where does the CD player or air conditioning unit come from? The fact is that most vehicle manufacturers rely on some components which are supplied from Japan and consumers won’t take delivery of a vehicle without a CD player, just because there is a delay in parts.

Nissan have been forced to close their Sunderland plant for three days at the end of April as they will be unable to manufacture cars without vital components from Japan. Honda cut its production by half at the Swindon plant where the Honda Civic is manufactured. But it’s not just Japanese manufacturers that are struggling, even Renault has announced that they will be unable to supply new vehicles with Bluetooth phone kits as they are unable to source the parts they need. It has been rumoured that Peugeot were unable to produce diesel units for over 5 days at the start of this month. Even some Vauxhall stocks have been affected, with lead times now exceeding Vauxhall’s usually efficient production schedule.

So what does this mean to the car lease industry and consumers? A delay? Worse? The truth is that no one knows. The optimistic hope to be back up to full production by the end of May, but that doesn’t mean things will just go back to normal immediately, parts that can’t be manufactured or shipped today won’t just be shipped tomorrow. There is a real possibility of long term delays in the supply chain and that will affect more than just new car availability.

Consider the position of a car dealer, knowing that stock is going to be hard to come by, will they:
A. Keep selling vehicles as you currently are and hope the supply chain improves?
B. Sell fewer vehicles to aid supply availability – thus making less money?
C. Remove special offers and deals and sell all vehicles at full price where possible, promoting pre-registered and used stock to customers who need a vehicle quickly?
It doesn't take a genius to figure that one out!

Even those who are not in the market to lease a car or are willing to wait for supply to improve, are bound to notice both new and used vehicle prices increasing in the coming months as used and pre-registered vehicles become more popular.

For the very best Car Leasing special offers, why not check out http://www.firstvehicleleasing.co.uk

To make a donation to the Japan disaster relief fund, you can do so at the Red Cross website: http://www.redcross.org.uk/Donate-Now/Make-a-single-donation/Japan-Tsunami-Appeal

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Edward Gillan
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