The vehicle leasing landscape is witnessing a remarkable transformation, marked by a surge in the adoption of salary sacrifice schemes and an undeniable shift towards EVs.
Recent data from the British Vehicle Rental and Leasing Association (BVRLA) reveals an unprecedented 68% year-on-year growth in salary sacrifice for cars in the third quarter of 2023, with electric vehicles leading the way in new business contract hires.
This pivot towards more sustainable cars in the UK reflects a growing environmental consciousness among both companies and employees, alongside the financial and operational benefits of electric vehicles. As the leasing sector adapts to these evolving preferences, the implications for the future of company fleets, environmental sustainability, and employee benefits are profound and far-reaching.
EVs are now dominating the BCH market, with more than three-quarters of new cars being zero-emission capable and battery electric vehicles (BEVs) accounting for almost half of all new deliveries in the period.
This trend reflects a broader shift within the corporate sector towards more sustainable transportation options, supported by attractive benefit-in-kind tax rates for EVs. It also underscores the leasing sector’s response to increasing demand for greener, cost-effective vehicle solutions, with leasing companies and car manufacturers working closely to make EVs more accessible and appealing through salary sacrifice schemes.
Despite the rapid growth of EVs in company car fleets, the report also points out the slower adoption rate among private motorists, with petrol vehicles still dominating new personal contract hire agreements. Addressing this disparity and stimulating demand for BEVs, especially in the secondhand market, remains a priority for the leasing industry.
The overall BVRLA leasing fleet has reached a six-year high, with significant growth in both the leased van sector and BCH cars contributing to this expansion. Challenges such as parts delays and a shortage of technicians have led to increased downtime for service, maintenance, and repair work, pushing leasing companies to include comprehensive service packages in nearly 900,000 vehicles to manage these issues effectively.