Could contract hire be the future for the car industry?
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The French government have recently announced a €6.5bn loan to support the country’s sinking car industry. It is the latest in a long line of similar measures taken by authorities around the world to protect jobs and the economy through the recession. A huge worldwide slump in car sales has left manufacturers struggling, and millions of workers are in danger of losing their jobs.
In the UK there have already been significant job losses despite the government lending large amounts of money to help keep business afloat. A number of factories have had to close temporarily and the Japanese carmaker Nissan has become the latest to announce that it will be making job cuts of almost 10% of its global workforce, including 1200 positions in the UK.
In these times of recession, it’s difficult to see how the car industry will recover. With things as they are, many people are feeling the strain and having to keep a close eye on their finances. Buying a car is the last thing on most people’s minds, and until the economy starts to improve the motoring industry can’t do much more than bide its time.
But direct sales are not necessarily the only option for car dealers. If the problem is that people don’t have enough money to buy cars upfront, the answer could be to offer more car contract hire deals where customers lease their car on a monthly basis until the cost has been paid off. The availability of these deals means that buyers have more choice when it comes to cars – they have the option of choosing a more expensive car that may normally be out of their price range, which means more money for the car manufacturers in the long run.
Contract hire is a great deal for the consumer too, not only does it mean you get a wider choice of more desirable cars but the payment is in manageable instalments and there are often loads of other benefits thrown in. The contracts often include extras like servicing costs and road tax in the monthly price, so there’s less to worry about. Really, everyone wins!
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