Contract hire/Operating leasing set to dramatically grow

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USAGE OF CONTRACT HIRE TO SURGE IN FLEETS

The popularity of contract hire – also known as operating leasing – as a method for funding company cars and vans looks set to dramatically grow over the next three years, new research shows.

Findings from the Arval Mobility Observatory’s latest Barometer show that the percentage of businesses operating vehicle fleets who either intend to increase or introduce the use of this means of finance during the next three years has risen to more than half (51%) from slightly more than a quarter (26%) during the last 12 months, an increase of almost 100%.

Shaun Sadlier, Head of Arval Mobility Observatory in the UK, said: “Operating leasing has long been a very popular method of car and van acquisition, offering advantages including fixed monthly rates, low initial outlay, removal of the residual value risk, the option to include service and maintenance, and more.

“At those points in time when economic conditions are uncertain, as seen over the pandemic period, the attractiveness of these benefits is brought into stark relief for employers and this is very much seen from the findings in the Arval Mobility Observatory research.

“We’ve seen almost a doubling of propensity across employers of all sizes, although the overall total is still weighted towards larger businesses – 80% of those with more than 1,000 staff answered this question in the affirmative compared to 21% of those with fewer than 10.

“However, even among the smaller employers, we are still seeing a significant increase year-on-year. It is a very clear and undeniable trend across the whole of our research in this area, and there is a strong possibility that many companies may be actively looking at new acquisition methods as we transition into the post-pandemic economy.”

IN THE NEXT THREE YEARS, DO YOU INTEND TO INTRODUCE OR INCREASE USE OF OPERATIONAL LEASING ON YOUR FLEET?

Overall        Fewer than     10-99           100-499        More than 1000
10 employees employees   employees    employees

2021           51% (20%)   21% (4%)      52% (12%)   67% (33%)   80% (39%)

2020           26% (6%)     11% (1%)      31% (10%)   33% (6%)     38% (10%)

Main figure includes total of “certainly” and “probably” responses. Figure in brackets is for “certainly” only.

The findings come from the 2021 Arval Mobility Observatory Barometer, which provides a comprehensive and authoritative picture of the current trends affecting company vehicles across the UK and Europe.