SALARY sacrifice is proving the darling of leasing brokers and leasecos.
New figures from Q1 2023 show that the salary sacrifice market grew 41% year-on-year, with 91% of registrations pure electric.
The figures were revealed by BVRLA in its latest Leasing Outlook Report, which described the salsac increase as “phenomenal”.
The BVRLA report said much of the increase was down to cash allowance drivers flipping into a highly tax and cost-efficient electric vehicle (EV), while employers were seizing the opportunity to provide a no-cost benefit at a time of spiralling wage inflation, along with recognition it could help with Scope 3 emissions from staff commuting to work.
Brokers have certainly been at the forefront of this salary sacrifice boomtime.
Gofor recently announced that it had set up a salary sacrifice scheme with Welsh distillery Penderyn, managing director Graham Lesslie commenting that “Salary sacrifice is such a great way of getting an EV at an affordable price. We’re seeing very high demand for the scheme right now.”
Meanwhile CBVC Vehicle Management has just concluded a huge salary sacrifice deal with insurer Allianz for its 8000 employees.
Managing director Mike Manners, said: “Introducing salary sacrifice at this scale, means that together we can make a real difference to the environmental, social and governance agenda and reduce carbon emissions for Allianz.”
Andy Bruce (pictured right), CEO of Fleet Alliance, who is also on the executive panel of the BVRLA’s insight panel, commented:
Salary sacrifice is the fastest growing part of our business as companies and employees see the incredible value for money it represents as well as doing the right thing for the environment.
The growth in salary sacrifice was one of the reasons that the BVRLA report noted that nearly half (49%) of the company cars delivered in the first quarter of 2023 were battery electric vehicles.
PCH in the doldrums
It’s hardly news to tell consumer PCH focused brokers that the retail market remains moribund with little uptick in EV sales.
EV sales were responsible for 16% of new sales and 1% of used purchases in the first quarter in stark contrast to the business contract hire market.
The BVRLA added that personal contract hire demand was struggling as private individuals found that renewal rates were several hundred pounds more that their current contract. It also said that agency distribution – such as Mercedes – which prevented leasing brokers from accessing vehicles was also having an effect.
Business contract hire numbers rose by 3.5% between the first quarters of 2022 and 2023 to 789,742 cars, but personal contract hire declined by 7% over the same period to 303,092 vehicles, said the BVRLA report.
Paul Harrison, chief partnerships officer at Leasing.com contributed an opinion piece to the report.
In the first quarter of this year, consumers continued to seek out longer four-year lease terms to help keep their monthly expenditure as low as possible and manage their household budgets. The average enquired on leasing rental in Q1 was £361 per month for consumers and £446+VAT for business users.
Paul said that personal contract demand for EVs remained soft, suggesting that the cost of living crisis impact had been deeper than anticipated on consumers and had affected confidence on EVs. Adding, “It will be interesting to see if the emergence of the new Chinese manufacturers and their lower-cost BEV models – as well as continued improvements in the availability of BEVs from all manufacturers – will boost BEV demand again as the year progresses.”
BVRLA director of corporate affairs, Toby Poston, added that a two-tier transition to zero emission motoring was emerging, with a gap growing between business and retail demand for EVs, suggesting that it could put the 2030 phase out of petrol and diesel models in jeopardy.
Elsewhere, the Outlook report noted that the van sector was performing particularly strongly – BVRLA members now operated 100,000 more vans than they did pre-pandemic.
Electric vans stubbornly short of Government target in a growing market
Despite a surge in electric van registrations this November, the UK market is still struggling to reach government targets.
ICE supply restrictions start to impact November registrations
Car manufacturers are restricting the supply of ICE vehicles so they can meet the demands of the ZEV mandate
Broker News Newsletter 03 December 2024: FCA challenged on competency and opaque leadership
Catch up on the latest leasing broker news in the 03 December 2024 Broker News newsletter
EV running costs drastically lower than petrol, new data reveals
New data from CrowdCharge reveals that
home charging an EV utilising smart charging technology can slash costs to a mere £400 annually.
Electric vans spend less time in the workshop
Electric vans are spending less time in the workshop for servicing compared to ICE and hybrid counterparts, according to new data from epyx.
Peak petrol: 2024 marks turning point for UK car market
The UK may have reached “peak petrol” in 2024, according to experts at the Vehicle Remarketing Association (VRA) annual seminar held at The Slate, Warwick University.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
