Why have van leasing costs increased so substantially since the pandemic?
09 June 2022 | Kate Parda | 3 min read
Let's face it, the days when we could offer you a Citroen Berlingo van deal for under £100 are long gone. Vehicle prices are rising, just like everything else these days, so if you're due to renew the lease on your van, you need to be prepared for the increased cost.
Prices for vans are rising as demand exceeds supply
The pandemic has had a profound impact on the automotive industry over the past two years. The lockdowns and social distancing in many European countries slowed the vehicle production down which led to most vehicle manufacturers increasing prices by at least 25% since June 2020 to offset the impact of rising input costs.
Vehicle registrations fell to an all-time low after the pandemic hit. Manufacturers were forced to reduce microchip orders because the demand for cars and vans dropped so dramatically. As soon as the lockdown ended, vehicle manufacturers were ready to resume production but found themselves at the end of the line to buy microchips. That's because firms producing electronic devices began purchasing them in huge quantities during lockdown due to the rocket high demand for tablets, laptops and gaming consoles.
The stress over the semiconductor crisis was not the only challenge faced by vehicle manufacturers. Wider supply chains have also been affected by the pandemic which resulted in higher prices for most components used in car and van production.
As life seems to be returning to normal, vehicle manufacturers are still struggling to keep up with demand. The result is not only longer lead times but also substantial reductions in discounts, especially when it comes to commercial vans. Special offers are often withdrawn without notice, making leasing companies' job tougher. Because demand outstrips supply, vehicle manufacturers are naturally taking advantage of the situation by offering fewer deals on stock vehicles, which is quite understandable when they have no concern about selling them.
New LCV prices increase and supply difficulties caused the prices of used vans to rise by 28%. Businesses that depend on commercial vans to deliver their services have two options: buy/lease a brand new van or buy a used van. In both scenarios, you'll pay more than you did before the pandemic but a new van at least eliminates the worry of having to spend more on expensive repairs you might expect from a second-hand vehicle.
How can we help?
The team at Commercial Vehicle Contracts is working hard to offer you the best van leasing deals and 1st class customer service, even during these difficult times. Do not hesitate to contact us if you are looking for a new van for your business. Several commercial vehicles are available for immediate delivery and more stock is arriving every month. Get in touch today!