What does the future hold for the world economy?
On April 8, LeasePlan International hosted an exclusive webinar for LeasePlan International clients, together with Ira Kalish from Deloitte, looking at what the future holds for the world economy and what companies need to consider as they navigate these uncertain waters
The webinar primarily focused on developments in the global supply chain, commodity markets and the movement of people and goods. We also answered a number of questions from our clients and partners.
The situation in short
We can see that inflation is likely to worsen in Europe and North America. Meanwhile, supply chain turmoil will continue, with wait times rising at ports in the USA and the availability of key components for vehicles (not just semiconductors; now also wire harnesses) being disrupted. Prices for raw materials such as palladium, aluminium and nickel are also high. Furthermore, there are labour shortages in many markets, including the transportation industry, which are exacerbating supply chain issues. We can expect to see more disruption across numerous industries, from agriculture to financial services.
EVs on the up
Oil and gas prices have risen dramatically – putting more focus on renewables. Governments and private businesses alike are looking to clean energy as the solution. This boost to the renewable energy sector is expected to lead to the further acceleration of vehicle electrification.
If you are concerned about energy prices, it pays to be prepared:
- Plan for a world where fuel prices remain high for some time (at least two years)
- Plan your transition to renewable energy sources, especially electric vehicles (EVs)
A mixed forecast
In the first year of the pandemic, we saw consumer behaviours change: demand for services dropped while demand for goods rose. Thanks to global vaccination programmes, lockdowns began to ease in 2021 – but inflation continued to climb. This was largely caused by supply chain issues resulting from the shifts in consumer demands. The significant increases in energy and food prices have only increased the overall inflation rate.
The best approach for companies? Plan well and make sure your business is prepared for different scenarios.
Surge in global commodity prices
The rise in commodity prices means a higher risk of recession in many countries where interest rates remain elevated. Higher costs for vehicle parts and materials, combined with the demand for new vehicles, are driving an increase in prices for both new and second-hand cars. For new small vans and passenger cars, we have seen price increases of 5.71% in the first three months of 2022. For larger vans, that figure climbs to 6.74%.
COVID-19 clouds the picture
With everything going on in the world, the pandemic has taken a back seat in the news – but COVID-19 (especially the fast-spreading Omicron variant) remains an issue. We are seeing more lockdowns in several countries, and the resultant manufacturing shutdowns are leading to more supply delays.
LeasePlan keeps your fleet mobile
While the situation is changing on an almost daily basis, LeasePlan is continuously monitoring government regulations, the capacity of our supplier network and the availability of spare vehicle parts.
We are continuing to perform normal vehicle service requests and activities like repairs and technical inspections. By working with our supplier network, we have also ensured that preventive measures – including extra vehicle sanitation processes – are in place to protect our customers.
In the coming year, we will continue to provide our clients with regular, up-to-date and proactive advice to help you steer through the continuously changing economic landscape. Reach out to your LeasePlan contact for more information.
Top four takeaways for fleet managers
- Place vehicle orders as early as possible, ideally 6–9 months in advance
- Accelerate electrification: OEMs are still prioritising low- and zero-emission vehicle
- Plan the three most likely scenarios for your fleet to mitigate the high degree of uncertainty
- Always channel service requests (including driver service requests) through LeasePlan, to ensure the fastest response