Vehicle technology continues to develop at an increasingly rapid rate and, as a result, business transport is set to change dramatically over the coming years. Jon Maycock, managing director, asset finance, at Hampshire Trust Bank, gives an overview of how smaller operators can benefit.
So, how do SMEs – the engines of the UK economy – navigate the multiple changes in vehicle technology in order to help drive future growth?
In a bid to tackle air pollution, the government plans to end sales of new petrol and diesel cars from 2040, meaning the existing infrastructure network will be increasingly adapted to support the new technology. We believe firms should think about how they can invest in supporting their future vehicle needs now.
Furthermore, through recent SMMT statistics, we have seen a 17% drop in demand for diesels in 2017, and a 35% increase in demand for electric vehicles. These statistics have seen calls from some quarters for the government to introduce a diesel-for-electric trade-in scheme.
The changes to accommodate new transport requirements are already well underway.
Indeed, as part of the Autumn Budget, the government reiterated its commitment to electric vehicles, announcing significant investment in charging infrastructure and extending the Plug-In Car Grant to 2020 to help consumers with the cost of purchasing new electric and hybrid vehicles.
The investment in electric vehicles appears to be working. According to the latest SMMT figures, appetite for alternatively fuelled vehicles has reached a record high, with UK consumers buying more plug-in cars than anywhere else in Europe. This trend is set to filter through to commercial vehicles, with electric taxis already on the streets in the capital and Royal Mail starting to trial electric vans of varying sizes. We expect other businesses to follow suit.
In addition, while the reality of driverless transport may be further away for most SMEs, it is no longer a sci-fi fantasy.
In the Autumn Budget, the government stated its commitment to having driverless vehicles on UK roads by 2021. In order to support this, regulation and infrastructure will be revised. In the future, driving – or not driving, should I say – could be a totally different experience that it is today.
We are already seeing an increase in driverless vehicles trials, with the idea quickly becoming more tangible for businesses across the country. The Driven consortium is currently working on a project, backed by £8.6m of government funding, which will see autonomous vehicles travelling between London and Oxford by 2019. The same technology is being used by the business world, with online supermarket Ocado trialling deliveries with driverless vans.
While this technology may not be relevant for all types of business, SMEs and the brokers that help support their funding needs, should keep up-to-date with developments.
In addition, lenders must ensure they can provide the necessary underwriting expertise so these vehicles can get on the road. Whether businesses opt to go driverless or not in the future, the technology underpinning this innovation is likely to find its way into most vehicles in the years to come.
Regardless of the extent to which this technology is adopted, and at what pace, there is no doubt that driverless transport will significantly alter the landscape of how firms meet customer delivery needs.
We know consumers already demand deliveries of goods and services within a 24-hour timeframe – how will driverless transport change this? For example, if there is no need for rest stops, will an eight-hour delivery window become the new expectation for businesses to meet? And with no need for holidays, will we come to expect deliveries on weekends and bank holidays?
There could also be business benefits. Adoption of autonomous driving cars could also bring a time advantage, freeing employees to catch up with phone calls and emails, read business reports or think of their next big business idea.
While there may be some questions about how this plays out in reality, it is expected that road safety could improve, meaning reduced repair bills, potentially lower insurance and happier, healthier staff.
What is clear is that transport is changing and SMEs need to get on board to ensure they are not left behind by the competition. Firms should stay close to their customers so they understand expectations when it comes to the delivery of goods and services and, in turn, brokers and lenders should stay close to their customers to help ensure they have access to the finance they need to invest in future transport.
By working together, we believe we can keep driving growth in the SME sector.