Appetite for electric company cars drives leasing fleet growth

The BVRLA’s leasing fleet grew 1.4 per cent in the last 12 months due to rising popularity of company-provided electric vehicles, which has offset the lower demand for vehicles on personal lease agreements and vans. The association’s latest Leasing Outlook report shows that salary sacrifice continue to drive growth in the sector, as it is up by 51 per cent and sustaining the UK’s transition to cleaner, greener models.

The sustained growth of salary sacrifice has allowed the BVRLA leasing fleet to reach 1.94 million vehicles. Business Contract Hire (BCH) accounts for the biggest portion of the fleet and has increased growth by 6.3 per cent. Both 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.

Toby Post, 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.”

Personal Contract Hire (PCH) agreements don’t benefit from the same incentives, subsequently leading to a slower demand for electric cars compared to company-provided cars. Higher interest rates, the cost of living crisis, and an general rise in vehicle prices has bought on further cost pressures, which have contributed to the demand in PCH’s decrease by 15.1 per cent 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 per cent to below 500, 000 vehicles.

The combined power of BCH and Salary Sacrifice is boosting the UK to their goal of a full-scale adoption of electric cars, making the BVRLA leasing fleet the cleanest it has ever been. Electric was the most popular type of new vehicles added to the fleet in Q3 2024, making up 44 per cent of new additions. In comparison, petrol accounted for 23 per cent. When considering salary sacrifice in isolation, 87 per cent of new orders were for BEVs in Q3 2024.

The acceleration of the UK’s uptake of electric vehicles has lead to more emissions removed from the UK’s roads, and the impact of declining residual values has only increased. High depreciation seen on electric vehicles to data has seen leasing and finance companies shouldering the drops, with concerns that the uptake of new and used BEVs will fall if the matter is not addressed.

Boston added: “The fleets that have championed the switch to zero-emission vehicles are now being hit with eyewaterinw 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 published quarterly, with the latest version containing data to end of Q3 2024. The statistics and analytics are accompanied by commentary from Fleet Assist *SMR trends), Cap HPI (impact of ZEV mandate) and Auto Trader (expectations for 2025). You can head the full report here.