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Cash-takers are returning to company car schemes in “noticeable” numbers thanks to the attractiveness of electric vehicles (EVs), reports Arval UK.

The Government introduced a new zero percentage benefit-in-kind (BIK) tax rate for pure EVs from April this year, and the leasing company says that plug-in company cars are now really gaining traction in the market.

Shaun Sadlier, head of consulting at Arval UK, explained: “Many cash takers liked their company car but didn’t like paying what they perceived as high benefit-in-kind and that was why they opted-out.

“Now, with low benefit-in-kind in place for EVs for at least five years, many more are now returning to company car schemes.”

Arval predicted that this would start to happen some time ago, but Sadlier said: “It’s now becoming noticeable In several of the major fleets with which we work.

“It’s a welcome development that will feed demand for zero-emission vehicles and lead to wider, faster adoption.”

New BIK rates are driving the choice in zero emission vehicles, but Arval believes that there are also a range of other factors in play.

“If you talk to fleet managers and their drivers, there’s a lot of enthusiasm around the vehicles themselves,” continued Sadlier. “We are beyond the early adopter phase and heading into mass-acceptance.

“All it takes is a couple of EVs on a fleet to disprove the reservations some people hold about these vehicles.

“They can see that misgivings such as range anxiety are actually of limited importance for the vast number of journeys that are made.”

Arval UK recently updated its own company car scheme to increase adoption of EVs and the move paid off with almost two thirds of its company car drivers making the switch so far.

Sadlier said: “All of our consultants and many of our sales team have switched to EVs.

“They act as ambassadors for the technology, developing personal experience to share with customers, friends and family – as more people drive EVs, consumer confidence will increase.

“Coupled with the growing number of different models that are available, plus the recent 2030 announcement, it’s not an exaggeration to say that we can all play our part in a zero-emission future and choosing an EV is a step in that direction.”  By Graham Hill thanks to Fleet News

Europcar Mobility Group has partnered with a Tchek, a tech start-up that has developed an automated inspection system.

The drive-thru device uses artificial intelligence and 3D scanning to capture images of and detect damage on vehicles.

Europcar Mobility Group will begin the digitalisation and automation of check-in check-out inspections of its traditional rental model. But, ultimately, the project will also include new mobility solutions, with a view to improving overall operational efficiency, which may require more maintenance and repair than conventional vehicles.

“The integration of a digital and autonomous solution into a customer journey is a subject that can be complex and we are very happy to have removed this thorn from the side of the leaders and managers on the company.

“We are very proud to have Europcar Mobility Group as the first major partner of the industry because we share in the vision; to always save time and profitability for users and employees by combining technological know-how with irreproachable customer service,” said Léa Chevry, co-founder of Tchek.

Tchek Scan is the first autonomous scanner in the world which increases productivity by automating and mechanising the inspection of the entire vehicle with great precision, thanks to 3D reconstruction, image capture and the rapid analysis of new repairs to be carried out by artificial intelligence.  By Graham Hill thanks to Fleet News

Michelin has announced it will incorporate Radio Frequency Identification (RFID) chips into all its car tyres by 2023.

The manufacturer said RFID technology is a cost-effective way of tracking tyres and a ‘significant contributor’ to predictive maintenance services.

It will also enhance driver safety by allowing Advanced Driver Assistance Systems (ADAS) such as ESP to adjust responses according to specific tyre characteristics, says Michelin.

Michael Ewert, vice president of Global Sales for Original Equipment at Michelin, said: “Since RFID technology ensures this exact tyre identification, it is conceivable in the future that drivers will see a tyre status display next to their fuel gauge.

“RFID in tyres makes many new business models possible and can also further increase safety when driving. We are convinced it represents a significant step forward in the tyre industry.”

The technology could also be used to improve recycling rates, allow proof of recycling and help improve the efficiency of energy recovery programmes.

Michelin says it is working with car manufacturers to develop algorithms that could pave the way for several new advances as cars become more connected.

Dealers and workshops will also benefit as exact tyre identification and data will be easily accessible, reducing fitting errors and helping with stock control, it says.

Up to 15 million chips a year will be encased in rubber at Michelin’s Homburg plant in Germany before they are installed in new tyres on site or shipped to other Michelin factories in Europe, China, Thailand and Brazil.

Michelin recently warned fleet managers to ensure they are selecting the right replacement tyres for their cars and vans, to avoid unnecessary costs. By Graham Hill thanks to Fleet News

New vehicle safety systems, such as emergency braking technology, are being switched off by drivers, new research suggests. 

The range of Advanced Driver Assistance Systems (ADAS) have become increasingly common in new cars and vans.

Autonomous emergency braking (AEB), for example, has become standard in many new fleet cars, but the research from Autoglass shows there is still a lack of knowledge and awareness.

It found that almost a quarter (24%) of drivers with ADAS enabled vehicles said they were not provided with any information about the importance of these features and how they work when they had the vehicle handed over to them.

The survey of almost 1,400 drivers also found that 41% intentionally switch off safety systems such as AEB or lane departure warning systems, while driving.

Neil Atherton, sales and marketing director at Autoglass, said that ADAS can help keep drivers and passengers safe, but only if the technology is “switched on and operating correctly”.

“ADAS is becoming more and more common in UK fleets and so more should be done to educate drivers, to encourage positive behaviour and ensure the systems are being used correctly,” he said

“Fleet managers have a responsibility to not only help drivers understand the benefits of these systems but also to review their supply chain to ensure the vehicles are being maintained to the correct standards.” This applies to drivers themselves, they should also acquaint themselves with all the safety systems.

The cameras and sensors that ADAS relies on need to be recalibrated to manufacturer standards if they have been impacted by a windscreen replacement, and in some cases body damage, to ensure the features are working correctly.

However, more than half (55%) of respondents were unaware that they need to be recalibrated when the windscreen is replaced and 52% of drivers were unaware that the cameras may need to be recalibrated if they have been impacted by body repair work.

When asked, two thirds (67%) of drivers agreed that more education is needed around the importance of ensuring this technology is properly maintained.

“It is paramount that fleet managers have a trusted partner who can carry out the recalibrations to industry standards,” said Atherton.

The increasing number of ADAS enabled vehicles in UK fleets has inevitably led to an increase in demand for recalibration.

In response to this, Autoglass has opened 12 new centres this year, taking the total number of centres in the UK to 90, to allow recalibration to be done in-house.

The new centres have been opened across the UK including Reading, Derby, Carlisle and Banbury.

The locations have been chosen to provide fleets with a more convenient service, and all centres offer windscreen repair and replacements, ADAS recalibration and replacement wiper blades, says Autoglass.

Atherton concluded: “Looking ahead to 2021, we are continuing our plans of opening more centres to ensure we are doing all we can to keep fleet drivers safe on the roads.”  By Graham Hill thanks to Fleet News

Car and van drivers could be charged to enter Greater London if the Government does not agree to give the capital £500 million from vehicle excise duty (VED).

The finances of Transport for London (TfL) have been decimated after Covid-19 resulted in a collapse in ticket revenues.

The Government agreed a six-month £1.8 billion funding deal with TfL last month, with the suggestion the congestion charge zone could be expanded to north and south circulars taken of the table.

However, TfL officials have been asked to investigate the feasibility of a new Greater London Boundary Charge for non-residents which would apply only to vehicles registered outside London which are driven into the capital.

“It amounts to an additional tax on the businesses working hard to keep London stocked with the goods and services it needs to operate,” Natalie Chapman, Logistics UK

The Mayor of London, Sadiq Khan, says a charge could help manage congestion, with an estimated 1.3 million vehicle trips made from outside London into the capital every weekday.

Around one million of these trips are into outer London alone and the majority of these journeys are made by vehicles registered to addresses outside of the Greater London boundary.

Khan claims that these vehicle operators greatly benefit from using the capital’s roads without contributing to their upkeep.

Greater London Boundary Charge

Initial estimates suggest a scheme like the Greater London Boundary Charge for non-residents – if levied at £3.50 a day and applying only to non-Londoners – could reduce the total number of weekday car trips across the GLA boundary by 10-15% and raise around £500m a year.

The worst polluters could be charged more to encourage those who do need to drive to do so in the cleanest vehicles, resulting in further air quality benefits, says the Mayor.

However, in order to avoid the potential Greater London boundary charge, the Mayor has called on the Government to instead allow the capital to keep the £500m raised annually from VED charged to London-based drivers.

He claims this money raised is almost exclusively spent outside the capital, with TfL left to fund maintenance of major roads in Greater London from its fare-dominated income.

Khan explained: “Londoners pay £500m worth of vehicle excise duty every year, which is then spent on maintaining roads outside the capital.

“It is not fair on London that our drivers should subsidise the rest of the country’s roads and get nothing in return.

“The Government must allow London to retain its share of VED and to support the capital’s transport system properly as in other world cities.”

He said if ministers were not prepared to “play fair”, then he would need to consider other options, such as asking people who live outside London and make journeys into Greater London by car to pay a charge.

TfL’s feasibility study will need to establish whether such a scheme would be effective in delivering key existing policy objectives at the same time as providing essential income for London’s transport network.

Natalie Chapman, head of urban policy at Logistics UK, said: “A boundary charge would be a significant blow to the recovering logistics sector; it amounts to an additional tax on the businesses working hard to keep London stocked with the goods and services it needs to operate.

“While Logistics UK understands the troubled financial situation Transport for London is in, a boundary charge simply papers over the cracks – it is not a sustainable solution to its problems.

“We are calling for cool heads – both the Government and TfL need to work together to agree a long-term vision to fund the capital’s transport network.”

Khan says a public consultation process would be required before any charge could be introduced, in addition to economic, environmental and equality impact assessments.

An amendment to the Mayor’s Transport Strategy could also be required, subject to consultation.

Development of the scheme, consultation and implementation would take at least two years – meaning that any new charge would not be levied until after the capital’s recovery from the pandemic.

The Mayor’s move to begin examining the feasibility of a new charge comes as an independent review of TfL’s long-term future funding and financing options is published.

It found that this type of road-user charging could have benefits for Londoners – for example, reducing weekday traffic and emissions – and raise significant funds.

Commissioned by the Mayor and the TfL board in July, the review was carried out by an independent panel.

Road user charging

Rob Whitehead, director of strategic projects at Centre for London, said: “Given that the Mayor was charged by Government with devising a plan for putting Transport for London on a financially sustainable footing, without the need for a long term additional grant, it is unsurprising that this review concludes new charges are needed.

“TfL’s financial difficulties have arisen mainly because of its fare-dependent funding model, which has been hard hit by a loss of passengers this year.”

He argues that building on Centre for London’s proposals for London-wide road user charging, the proposal to create a cordon charge for vehicles around Greater London could help to secure the extra funding that TfL needs.

“It complements the Congestion Charge and the ULEZ, could be politically ‘sellable’, would raise substantial revenues, and should help to reduce congestion and pollution at a time when London’s roads are under unprecedented pressure,” he added.

“There is also a rough justice to the proposal. London drivers pay half a billion pounds to the Treasury every year in vehicle and fuel tax, with much of the money spent on the national road network, virtually none of which is in London. So it’s not unfair to ask those driving in from outside London to help pay for its transport infrastructure.

“That said, cordon-based schemes are a crude way of charging drivers for the contribution they make to congestion, pollution and road wear and tear.

“At some point the Mayor and TfL are going to have to bite the bullet and establish a distance-based road user charging scheme for London.” By Graham Hill thanks to Fleet News

The amount fleet operators and consumers with PCH are paying in end-of contract excess mileage charges for cars has risen significantly for the second consecutive year.

This year’s FN50 (top 50 leasing companies) research has found the average charge for defleeted company cars is £449, 19% higher than last year, which itself was 17% higher than in 2018. The 2018 figure was a record low of £324. The figures are similar if not slightly higher for consumers.

There remains a huge disparity in the size of the average charges reported by individual leasing companies and these range from as little as £20 to £900. The extremes highlighted in last year’s FN50 were £28 and £1,182.

Of the respondents to this part of the FN50 research, 38% of leasing companies had charges above the average amount, with 63% of those at £700 or above.

Of those with charges below the average, 15% were £100 or less.

The average proportion of cars subject to excess mileage charges has fallen one percentage point from last year to a record low 18%. Over the longer term, this proportion is significantly lower than the 2005 figure of 32%.

There is also a large disparity between leasing companies in the proportion of cars subject to excess mileage charges.

These ranged from as low as 0.5% to as high as 61%. There was a £350 difference in the size of the actual average charges these two companies billed: £440 and £790 respectively.

Just more than one-quarter (28%) said the proportion of cars returned which were subject to excess mileage charges was 10% or lower, while 24% said their average figure was about 25%.

Meanwhile, van operators fared much better with excess mileage charges. The average charge for vans fell £2 from 2019’s figure to £482, which points to a year of relative calm after the previous year’s 40% increase.

Those leasing companies with above-average charges for cars accounted for 67% of the companies with above average charges for vans.

As with cars, there is a huge disparity in the average charges reported by individual leasing companies, ranging from £55 to £900.

Of the leasing companies which supplied this information, 42% had charges above the average amount, with 16% at £750 or above. Of the companies below the average, 50% were £250 or less.

The average proportion of vans which were subject to excess mileage charge has remained steady over the past three years.

This year it was 19%, two percentage points below last year’s figure and one percentage point lower than 2018. Two-in-five (38%) respondents reported being at or above the average figure.

As with cars, there was a large disparity between the proportions reported by individual leasing companies. The lowest figure was 2% and the highest 85%.

Overall, 28% of respondents said their average proportion of vans which were subject to the charges was 10% or lower, while 12% were above 50%.

Like last year, there does not seem to be a common factor to determine why the excess mileage trends have either increased in the case of cars or slightly decreased for vans.

There is no consistent patterns in the duration of average replacement cycles operated by the leasing companies with the highest charges, or whether vehicles were being returned early, on time or late at the end of their terms.

Another unknown is the effect the Covid-19 pandemic had on this year’s figures. In July, a Fleet News survey of 150 fleet decision-makers found almost 61% expected to see average mileages of their company car fleet fall.

More than half (57%) of respondents said the majority of company cars they operate were not being driven for work, while 43% said less than one-third of the vehicles on their company car fleet were being driven for work.

This would suggest vehicles could either have been returned with lower than expected mileages as business travel reduced, although many fleets extended their vehicle contracts during the pandemic. Other vehicles could be likely to incur increased charges due to an increased workload.

LOCKDOWN HELP

During lockdown, leasing companies worked to mitigate the impact on mileage charges.

For example, Miguel Cabaça, managing director of Arval UK, says: “Arval will be as understanding as possible in these difficult times.

“We will be having individual discussions and be offering proactive solutions client-by-client.”

Leaseplan said customers’ individual mileage allowances would continue to roll on, on a pro rata basis, if leasing agreements were extended.

This year’s FN50 should provide a clearer picture of the impact of the pandemic on business mileage and how fleet decision-makers have managed their vehicles during the crisis, as more leases expire and vehicles are returned to their leasing providers.

Previous FN50 reports have suggested that when end-of-contract charges are falling, it is most likely through contract hire companies keeping track of mileage and discussing higher mileage than agreed with customers mid-term, and allowing flexibility to increase monthly rental rates to compensate so there would not be a large excess mileage bill at the end of the fleet lifecycle.

These are among the measures introduced by Free2Move as it has focused on reducing excess mileage charges for its customers.

“We have taken two very decisive moves in this area in recent years, taking account of prior dissatisfaction in the market at the level of these charges,” said Mark Pickles, managing director of Free2Move.

“Pence-per-mile rates for excess mileage have been reduced to take account of the ‘real’ impact on residual values, rather than to be used as a ‘penalty’ or profit opportunity – treating our customers fairly is a core principle.

“We also have a large number of our fleet fitted with onboard tele-matics, using our own Free2Move Connect Fleet system, to be able to monitor the mileage on a real-time basis.”

Where Free2Move sees mileage is starting to trend above the contract-agreed figure, it calls its customers to find out if they are aware of this, if it is a trend that is likely to continue or is a seasonal aberration, or if they would like to amend their contract to avoid any end-of-contract penalties.

Pickles added: “Most customers, faced with this up-to-date and reliable information, elect to increase their monthly lease payment slightly to cover the extra mileage and avoid a nasty surprise at the end.

“In the same way that we are used to our gas and electricity bills being adjusted to take account of higher usage rather than building up a deficit on our home energy account, Free2Move is able to neutralise this impact and give the customer a choice of how to deal with a change in usage.

“By utilising the telematics data, we can avoid false alarms, see patterns emerging and give fleet managers the choice of how they wish to manage the change.”

Pickles adds that pooled mileage arrange-ments give its larger customers more flexibility and reduce the need to swap cars or vans between users to manage mileage, resulting in fewer excess mileage charges and less intervention on the part of the customer.

The average proportion of trucks which attracted excess mileage charges also increased year-on-year, this time by three percentage points to 10% compared with 2019.

The average charge was £600 – 50% less than in last year’s FN50 report, while the disparity in the proportion of trucks subject to excess mileage charges reported by individual leasing companies was much smaller than with cars or vans, ranging from 9% to 12%.  By Graham Hill thanks to Fleet News

Residual values could fall by 10% over the next year as the economic effects of a recession and high unemployment bite.

The prediction is included in the BVRLA’s latest Leasing Outlook report, which warns the vehicle leasing industry is braced for yet more challenges as “the most turbulent year imaginable” comes to an end.

The report says the sector remains agile but is also seeking clarity around the impact of Brexit, the Covid-19 pandemic and the transition to zero-emission motoring.

BVRLA members expect battery electric vehicles to hit 6% of the total lease car fleet by the middle of next year, with plug-in hybrids hitting 9%.

Petrol’s market share will begin to plateau at around 38%, with diesel slipping under 50% for the first time at 46%.

Andrew Mee, head of forecast UK at Cap HPI, told the report: “On average, used car values are now around 7% higher than they were a year ago and we consider this unsustainable.

“As we move through Q4, we expect that the strength in the used market may start to slowly ebb away, as pent-up demand is satisfied and the typical pattern of falling values in the latter months of the year could be re-established.

“A fall of 10% over the next year looks reasonable.

“It is broadly similar to 2019 and is nowhere near as bad as we saw in 2008.”

The report says there will be an improvement beyond 2021, but it will not be as rapid as it was in 2009, due to Covid having a much broader and more complex set of impacts on the economy and automotive market.

The three other broad themes covered by the report are:

• Supply chains – leasing companies are looking forward to a rebound in demand for fleet vehicles as the economy recovers but are concerned about the potential for extended lead times and the reputational damage that could ensue.
• Brexit – The type of EU-Exit we get will have a huge impact on business confidence, lead times, the cost of new vehicles and the ease with which they can be moved around the UK and Europe.
• Liquidity – The financial and administrative burden of providing forbearance to those hit by the pandemic will last well into 2021 and there are signs that the supply of motor finance is also tightening.

By Graham Hill thanks to Fleet News

Drivers are being urged to ensure they are selecting the right replacement tyres for their cars, to avoid unnecessary costs.

Michelin warns that inappropriate or incorrect fitments could negatively impact fuel economy and tyre life, as well as affecting vehicle handling and performance characteristics.

In some cases, incorrect tyre fitment can risk invalidating the vehicle manufacturer’s warranty.

Michelin’s fleet team points to a rise in the instances of vehicles driving on inappropriate tyres, such as cars running on van tyres (or vice versa), the mixing of standard and run-flat technology products, or incorrect tyres which don’t have the required speed or load rating for the vehicle.

Some manufacturers of 4x4s and high-performance vehicles also stipulate specific marked, homologated tyres for their vehicles.

Brian Porteous, Michelin’s technical manager – Car, Van, 4×4 and Government Contracts, said: “It is crucial that any replacement tyres you select are compatible with each other, compatible with the vehicle and deliver the appropriate handling and performance characteristics.

“Vehicle manufacturers work incredibly hard to fine-tune their cars and vans to handle a certain way, and all of that can be upset if you fit a tyre which, although the correct size, might be intended for a different vehicle altogether. Driving on inappropriate tyres can also lead to reductions in fuel efficiency, passenger comfort and tyre life, plus a noisier ride.”

To help fleets and consumers maximise safety and avoid incorrect tyre selection, Michelin has published a six-point guide which is applicable regardless of tyre brand preference.

• Tyres must meet the vehicle manufacturer’s requirements of load and speed, plus any local regulatory requirements such as: vehicle speed, E marking, winter marking, directional fitment etc.
• If a vehicle manufacturer requires specific marked, homologated tyres, then these must be fitted. It is sometimes possible to use other tyres, but not always – consult your vehicle handbook
• It is essential for vehicle stability that the best grip is maintained at the rear. If all tyres are not being replaced together, the new tyres must be fitted to the rear
• The tyres on each end of an axle must be of the same type. Differences in tyre performance, particularly towards the end of a tyre’s life, make this critical for vehicle stability and predictability
• Winter tyres must always be fitted in full vehicle sets. Do not mix summer and winter tyres across a vehicle
• Run-flat technology tyres must always be fitted in full vehicle sets and to the appropriate wheel type. The vehicle manufacturer’s guidance must be followed as there are often differences in vehicle characteristics to work effectively with the run-flat tyre capability

Peter Wood, Michelin key account manager, added: “As technology has evolved, so has tyre choice. Customers can now select between summer, all-season, winter, extra load, run-flat technology and even acoustic tuned tyres, to name just a few of the options.

In one size alone, there can be several different load and speed ratings to suit various vehicle types, plus options for different seasons and driving styles.”  By Graham Hill thanks to Fleet News

The first electric vehicles (EVs) were given green number plates from Tuesday, December 8, with the Government suggesting the move could unlock incentives for drivers and fleets.

Ministers gave the go-ahead for the new number plate design for pure electric vehicles (EVs) in June.

The new number plates can be retro-fitted to any existing vehicles, including cars, vans, buses, HGVs, taxis and motorcycles as long as they emit no CO2 emissions at the tailpipe.

They will consist of a green flash on the left-hand side of the plate and can be combined with the Union flag and national identifiers already permitted by the regulations.

Transport Minister Rachel Maclean says that the green number plates build on last month’s announcement to end the sale of new petrol and diesel cars and vans in the UK by 2030.

She also believes that EV operators could benefit from local initiatives such as cheaper parking and cost-free entry into zero-emission zones.

She said: “Not only will green number plates raise awareness of the increasing number of cleaner vehicles on our roads, they could also unlock a number of incentives for drivers.

“It’s clear there has never been a better time to make the switch to a zero-emission vehicle.”

Ashley Barnett, head of consultancy at Lex Autolease, told Fleet News says that today’s introduction of green number plates to identify zero-emission vehicles on the UK’s roads will boost driver advocacy even further and will go a long way to keep up the momentum behind the Government’s Road to Zero strategy.

“The deadline to achieve net-zero emissions by 2050 looms ever closer, so anything that simply and clearly communicates the benefits of electric vehicle adoption – from better parking spaces to accessing emissions-restricted zones – to a wider audience is a welcome shot in the arm,” he said.

A survey by Nissan suggests that a third of motorists in the UK would be more likely to buy an EV, because of the new green number plates

.

Andrew Humberstone, managing director of Nissan Motor GB, said: “The age of the electric vehicle is now approaching rapidly and these new green registration plates will soon be a common sight on our roads.”

The Nissan survey, carried out by respected pollsters YouGov, found that with the introduction of green number plates, and the prospect of further incentives linked to EV ownership, 32% of people would be more likely to buy an electric car.  By Graham Hill thanks to Fleet News

For the second consecutive year, the FN50 top 10 has, aside from some minor positional shuffling, remained the same: the same companies largely in the same places.

The two exceptions are Arval and LeasePlan switching places and an identical swap by Free2Move and Zenith.

Also occurring for the second consecutive year is a decline in total car and van volumes funded by the UK’s 50 biggest leasing companies. The 2.5% reversal, or 43,186 vehicles, is slightly higher than the previous year’s 2%/35,371, resulting in an FN50 funded fleet of 1,662,320 vehicles.

However, where last year the drop in vehicles was largely prompted by the exit of Mercedes-Benz Financial Services (now retail only) and Sandicliffe Motor Contracts (no longer funding), the year it is due to an industry-wide reduction in company cars.

This is a result of people opting for cash (the number of employees paying benefit-in-kind (BIK)  tax on a car continues to fall – 90,000 have left a car scheme over the past five years) and, more recently, by the impact of Covid-19 on jobs, although the full shock of this impending economic crisis is still to be felt.

And, while opt-outs are often converted into personal leases, this hasn’t plugged the gap.

Consequently, the number of company cars in the FN50 has fallen year-on-year by 3.3%, or 41,080 units, while vans saw a negligible 0.5% dip of 2,106 vehicles.

It continues a three-year trend of vans taking a gradually increasing share of the total number of vehicles funded by the FN50: in 2017 they accounted for 24%; this year it’s 27%.

The FN50 data presents a slightly less sombre picture than the recent industry-wide figures released by the British Vehicle Rental and Leasing Association which showed a lease fleet decline of 3.6% year-on-year, at a little more than 2.53 million vehicles.

However, its survey revealed growth in the van fleet by 2.1%, which partially offset a heavier deficit in cars of 5.2%.

Swing towards PCH

Healthier performance by personal leasing Business contract hire bore the brunt of the losses, down 9.7%, while personal contract hire (PCH) enjoyed a healthier performance, up 5.7%. This is echoed by the FN50 members, where the larger organisations have been extending their penetration into the personal leasing sector in recent years.

The past couple of years have seen a definite swing towards PCH among the UK’s biggest leasing companies. In 2018, fleet leasing accounted for 87% of their car business; this year that has fallen to 80%. Almost a quarter of a million cars (244,194) are now PCH.

Often, manufacturer-owned leasing providers have a greater proportion of retail business due to the agreements sold via their franchised dealers, such as FCA’s Leasys at 69% and Renault’s RCI at 67%, while ALD, which powers white label finance for the likes of Kia and Ford, is also weighted towards private leasing. Santander Consumer Finance (the clue being in the name) is 82.5% private and Affinity Leasing, which specialises in corporate affinity schemes for employees, is 96% private.

With the likes of Zenith (ZenAuto) and Arval (Arval for Employees) stepping up their retail aspirations, and growth in salary sacrifice schemes (although not all leasing companies view these as private leasing because of the central agreement with the employer), plus bank-owned organisations such as Lex Autolease improving internal synergies, personal lines could tighten their grip on the FN50 numbers in the coming years.

“The market has been diversifying for many years now and personal leasing in its various forms has penetrated both the retail market and corporate sectors,” says Craig McNaughton, corporate director at the UK’s biggest fleet lender Lex Autolease.

However, a compelling counter-argument centres on the growing attractiveness of electric and plug-in hybrid cars due to the very low BIK tax rates over the next four years.

Some leasing companies are already reporting electric cars accounting for 30-40% of their order books.

McNaughton again: “The advent of 0% BIK for EVs and low BIK for ULEVs has seen movement back into company cars and salary sacrifice.”

He believes that traditional fleet funding methods will remain dominant, despite suggestions among some industry commentators that a growing need for flexibility will persuade companies to negotiate shorter terms and consider alternative funding arrangements.

“We have been part of subscription trials with partners and they do have potential in very specific circumstances, but the economic model for such services remains a challenge, as can be seen by the poor financial results that continue to be delivered by traditional vehicle rental companies,” he says.

“As such, changes to shorter leases and more flexible products are likely to remain small scale due to their relative expense with the market continuing to mainly fulfil demand for providing long-term leasing/funding solutions.”

Nevertheless, flexibility is a recurring theme during 2020 due to the uncertainties caused by Covid-19 and a surge in people working from home, reducing their dependence on the car.

Alphabet doesn’t see subscription services as a replacement for traditional funding, but it does recognise the need for increasing flexibility, according to chief commercial office Simon Carr.

“We expect to see a rise in demand for shorter term, adaptable leasing arrangements to bridge the gap between rental and longer-term leases as drivers’ roles and requirements change,” Carr says.

“Funding choices will become even more data-led and wholelife costs will play an even bigger part in fleet managers’ decisions as the total cost of mobility will be key to running a successful fleet in a time when travel has naturally reduced.”

Flexibility doesn’t just mean shorter terms, however. Salary sacrifice expert Tusker has responded to customers’ needs to “provide shorter and longer agreement options for employees to increase inclusion for lower earners and those on shorter employment contracts”, says CEO Paul Gilsham.

EVs stimulating growth

Meanwhile, Claire Evans, fleet consultancy director at Zenith, believes EVs are stimulating growth in all sectors of the market, from company cars to salary sacrifice to personal contracts.

“We are already seeing a trend into leased vehicles and away from ownership with the growth in electric vehicles and movement to subscription-based services based on monthly affordability,” Evans says.

“It has resulted in increases in salary sacrifice and personal contract hire cars, where EVs account for one-in-two and one-in-four orders placed this year, respectively. We expect to see this trend continue.”

As part of the FN50 survey, leasing companies provide data on the vehicles they manage on behalf of a fleet customer but don’t fund.

For cars, the numbers have risen, showing that the need by UK business for fleet management support is growing, as outsourcing of a function sometimes seen as non-core continues.

This year, the number of cars under fleet management has risen by 27,046 to 259,518; meanwhile, the number of vans has fallen slightly, from 62,808 to 62,129.

As a business essential tool, vans are much more likely to be an in-house responsibility, particularly if the company also runs trucks with their elevated legal and compliance requirements.

The rise in fleet management has helped many leasing companies to offset the reversals in fleet funding.

With three new entrants in 2020, 26 of the 47 returning FN50 companies saw their funded fleet fall compared with 2019, up from 19 companies last year.

By far, the biggest impact was felt by those left outside the top 20 (see table), where double-digit falls were commonplace.

Half of the top 10 are funding more vehicles than a year ago, with notable growth in cars and vans by Arval, lifting it by 6% to leapfrog LeasePlan into third place, and seventh-placed Hitachi Capital Vehicle Solutions, up 7% thanks to wins in both cars and vans.

Free2Move bumped Zenith from eighth after a 5% boost to its funded business, almost entirely cars with a 7,000-unit rise, while Zenith experienced a marginal 1% drop in funded business – although its van division was up year-on-year.

Zenith has also extended its penetration into the truck business with the acquisition in September of Cartwright Fleet Services, Cartwright Rentals and Cartwright Finance Sales from the administrators.

The move created one of the UK’s largest HGV and specialist fleets with more than 50,000 vehicles and one of the UK’s largest trailer rental fleets.

It also underlines how some of the UK’s top lenders are now multi-asset funders with a breadth of interests, from salary sacrifice, job need and perk cars to vans, trucks and trailers.

And some are starting to gow even further, with e-scooters/ e-bikes, car share and other forms of mobility services.  By Graham Hill thanks to Fleet News