How changes in the Automotive Industry are feeding into mainstream asset finance.by Matthew Price
My name is Matthew, I am an BEng Automotive Engineering student in my final year at Loughborough University. I am currently spending time as a Product Development Intern at EquipmentConnect. Recently, I have reflected on the huge changes currently affecting the automotive industry as we make the transition from traditional internal combustion engine cars, which were required less initial capital investment but are more expensive to maintain, to modern electric vehicles where vehicles and infrastructure require more capital up front but the long-term cost and benefits are superior.
This has been prominent in the huge number of research projects specialising in battery technology that I’ve seen at Loughborough, as well as the amount of research into other alternatives such as hydrogen fuel cells and alternative fuels. There seems to be a gradual phasing out of fossil fuels in favour for the low-carbon electric vehicle options we’ve seen progressively emerging in the market.
Now, almost every major vehicle manufacturer has either a hybrid or all-electric option; this has even been reflected in motorsports with the introduction of Formula E in 2014 and the introduction of the new MotoE last year.
These new technologies make it an exciting time to be in the automotive industry. A large amount of time and money is currently being pumped into research and development by automotive companies, designers now have a much greater flexibility in design due to no longer being restricted to designing a vehicle around an engine. As a result, concept cars are looking more and more stunning, each with their own fascinating capabilities and it’s like the automotive world has come vibrant and alive again! One such example is the Mercedes-Benz Vision AVTR concept shown at the CES Show in Las Vegas last week.
While at EquipmentConnect, I've witnessed how tech can facilitate easier access to flexible finance products and how this can support asset purchasing decisions. With the economy largely stable, people and companies are keen to invest in better quality assets like electric vehicles as long as their cash flow is supported. This is where digital financial products that are fast and flexible come into play. In auto finance PCP has now largely become the dominant form of financing a car and we are likely to see more more flexible variants of PCP in the years ahead. A recent review in the Financial Times gave a thumbs up to PCP because of the convenience and certainty it offered the customer. No doubt this product will make headway in the business equipment finance market in the years ahead.