Could contract hire be the answer for the car industry?
The French government have recently announced a €6.5bn loan to support the country’s sinking car industry. It is the latest in an increasingly long line of similar measures taken by authorities around the world to protect jobs and the economy through the recession. A worldwide slump in car sales has left even the most established car 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 industry receiving large amounts of money from the government to keep the business afloat. A number of factories have had to close temporarily and the Japanese carmaker Nissan has just become the latest to announce that it will be cutting almost 10% of its global workforce, including 1200 positions in its UK factories.
In these difficult times of recession, it’s hard to see how the car industry is going to recover. With things as they are, most people are feeling the strain and need to keep a close eye on their finances. It’s safe to say that buying a car is the last thing on most people’s minds, and until the economy starts improving the motoring industry can’t do much more than bide its time.
But getting direct sales doesn’t always have to be 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 can choose a car that would 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. It really is a win win situation!
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