The popularity of company-provided electric vehicles saw the BVRLA’s leasing fleet grow 1.4% in the last 12 months, offsetting lower demand for vehicles on personal lease agreements and vans. The association’s latest Leasing Outlook report shows that salary sacrifice continues to drive growth in the sector, it is up 51% and sustaining the UK’s transition to cleaner, greener models.
Toby Poston, BVRLA Chief Executive said: “Salary sacrifice is the zero-emission transition’s driving force. Its popularity continues to grow, bolstered by a wave of smaller, cheaper electric vehicles and innovative new leasing products providing second hand EVs. More employers are seeing the appeal and more employees – at all income levels – can make the switch.”
The sustained growth of salary sacrifice contributed to the BVRLA leasing fleet reaching 1.94m vehicles. Business Contract Hire (BCH) accounts for the biggest portion of the fleet and delivered growth of 6.3%. BCH and salary sacrifice benefit from the fair company car taxation regime on electric vehicles, with Benefit in Kind rates confirmed through to the 2029/30 tax year.
Personal Contract Hire (PCH) agreements don’t benefit from the same incentives, causing demand for electric cars to be slower compared to company-provided cars. Additional cost pressures brought on by higher interest rates, the cost of living crisis, and overall rise in new vehicle prices, have combined to see PCH demand fall 15.1% year on year. The same factors are keenly felt by SMEs across all sectors too, contributing to the van sector seeing demand fall by 3.6% to below 500,000 vehicles.
The strength of BCH and Salary Sacrifice is helping the UK accelerate adoption of electric cars and has made the BVRLA leasing fleet the cleanest it has ever been. Electric was the most popular fuel type of new vehicles added to the fleet in Q3 2024, accounting for 44% of new additions (petrol: 23%). When considering salary sacrifice in isolation, 87% of new orders were for BEVs in Q3 2024.
While the acceleration of electric vehicle uptake is adding more vehicles to the lease fleet and removing emissions from the UK’s roads, the impact of declining residual values only increases. High depreciation seen on electric vehicles to date has seen leasing and finance companies shouldering the drops, with concerns that uptake of new and used BEVs will fall if the matter is not addressed.
Poston continued: “The fleets that have championed the switch to zero-emission vehicles are now being hit with eyewatering costs in vehicle depreciation. Our Happy EV After campaign highlights how support is required to help bring confidence and stability back to this vital part of the automotive ecosystem. Supply of used BEVs will continue to surge and we must work with Government and wider industry to create and sustain demand for these vehicles.”
The BVRLA’s Leasing Outlook report is produced quarterly, with the latest version containing data to end of Q3 2024. The statistics and analysis are bolstered by commentary from Fleet Assist (SMR trends), Cap HPI (impact of ZEV mandate) and Auto Trader (expectations for 2025).
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Read or download the report in full: BVRLA Leasing Outlook.
