BVRLA reports business contract hire car fleet decline
27 July 2021
Author: Sean Keywood
The leasing industry has seen a fall in the number of cars being taken on business contract hire agreements, according to industry body the BVRLA.
In its latest Leasing Outlook report, it said that in the first quarter of 2021, the number of business cars on members' fleets, at 1,017,950, was down by 2% compared with the fourth quarter of 2020, and down by 7.3% year-on-year.
The overall outlook was better for BVRLA members, as the organisation reported the overall size of their leasing fleet grew by 1.5% in the first quarter of this year, following 12 consecutive quarters of decline.
This was partly due to a 0.4% growth in the car fleet - driven by a 10.3% year-on-year increase in consumer leasing - but mainly due to a 5% growth in the van fleet, with the car fleet still 3.3% smaller than it was at the same point in 2020.
Although the number of leased business cars is declining, those that are on the fleet are becoming more efficient, with a reported business car fleet CO2 average of 98g/km, and an average figure for new additions to the fleet of just 70g/km.
The effect of incentives such as low BIK tax rates for efficient business cars can be seen by comparison with the personal leasing fleet, which has an average figure for new additions of 120g/km.
Electrified powertrains are a big part of the green movement in business car leasing, with 47% of orders during Q1 being for plug-in or hybrid vehicles, with 19% for pure electric cars, compared with just 16% for long-time fleet favourite diesel. Pure EVs and plug-in hybrids now account for 13.2% of cars on the overall fleet.
When discussing issues facing the industry, the report highlights how the semiconductor crisis in new vehicle production could continue into early-2022, which is set to mean logistical problems, with leasing companies needing to keep customers regularly updated about deliveries to avoid unexpected delays.
The report also highlights a need for better data on EV residual values, with the BVRLA said to be working with stakeholders to explore a range of supporting measures, including used EV labelling, battery health certificates, and EV residual value underwriting.
The report also states that despite a long-term decline in demand, in the short-term leasing executives predict a rise in diesel vehicle sales among fleets that have not yet adapted their policies to include alternatively fuelled vehicles.
BVRLA chief executive Gerry Keaney said: "The leasing sector continues to remain resilient in the wake of the global pandemic, with a pattern of growth feeding a sense of optimism amongst members.
"They are making great strides in electrifying their fleets to give customers access to affordable and sustainable vehicles.
"With over 130,000 plug-in vehicles on the combined BVRLA fleet, new challenges are coming to the fore, particularly around the risks associated with unknown residual values on a rapidly expanding EV fleet. Problems in the supply chain are also hindering vehicle delivery.
"Despite this, the leasing sector remains strong and has a lot to be proud of."