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Contract Hire expected to leap for company vehicles

Contract Hire expected to leap for company vehicles

Vehicle Leasing
Tuesday, 1 September, 2020

There may be a leap in the use of operational leasing, or contract hire, as a means of acquiring company cars and vans, according to new research from Arval Mobility Observatory.

When asked whether they intended to introduce or increase use of operational leasing in the next three years, more than a quarter (26%) of fleets said yes, compared to just over one in 10 (12%) when the same question was posed in 2019*.

Shaun Sadlier, head of Arval Mobility Observatory in the UK, said: “These responses indicate more than a doubling of the overall tendency, year-on-year, to increase the use of operational leasing or contract hire as it’s also known.

“This method of acquisition has been gradually increasing across the market for a long time but it’s been a gradual change over decades. Here, we see signs of a potential leap forwards rather than further incremental steps. The movements are large enough to suggest a genuine shift in attitude.”

The move was marked across organisations of all sizes except for the very smallest, he added, with the trend clear across all businesses with more than 10 employees.

“At the largest scale, 38% of businesses with more than 1,000 employees now say they would implement or increase the use of operational leasing compared to 17% when asked the same question in 2019.

“However, for those with 10-99 employees, the change is even more marked, with a rise from 8% to 31% year-on-year, which is just under a fourfold improvement. It’s pretty dramatic.”

Shaun explained that operational leasing had very clear advantages – predictable costs, the avoidance of residual value risk, easy packaging with other key vehicle services and more – and one or all of these factors appeared to be really gaining favour.

“What is also interesting is that this research was carried out before the coronavirus crisis. In a business future where there will undoubtedly be increased and perhaps substantial pressure on company budgets in the short and medium terms at the very least, there is every chance that operational leasing will look even more appealing to fleet and mobility decision makers.”

For the 2020 edition of its Fleet Barometer, the  Arval Mobility Observatory this year questioned 5,600 businesses in 20 European countries, posing a wide range of questions covering current fleet and mobility trends.

More information on the research project can be downloaded from arval.co.uk/amo-insight.

 

*Do you intend to implement or to use more operational leasing now or in the next three years (total of certainly and probably)?

  Total % 10 employees or fewer 10-99 employees 100-999 employees More than 1,000 employees
2020 26% 11% 31% 33% 38%
2019 12% 10% 8% 13% 17%

 

To download a full copy of the Arval Mobility Observatory Fleet Barometer 2020 visit arval.co.uk/amo-insight.

 

*Methodology

For this independent survey, 5 600 Fleet Manager Interviews were carried out by independent research company Kantar with a mix of data collection models: a full interview conducted by phone or recruitment by telephone and a link sent to complete the survey online.

The scope (20 countries), which has been extended this year, includes most of the European countries – Austria, Germany, Belgium, Spain, France, Italy, Luxemburg, the Netherlands, Poland, Portugal, UK, Czech Republic, Switzerland, Finland, Denmark, Norway, Sweden – plus the important fleet markets of Russia, Turkey and Brazil. The companies in scope operated at least one vehicle.

The distribution of the interviewees was as follows: 

  • 33% of companies with less than 10 employees
  • 20% of companies with 10 to 99 employees
  • 27% of companies with 100 to 249/499/999* employees (*dependant on market)
  • 20% of companies with 250/500/1000* employees and more (*dependant on market)

Contact us

For more information, please contact Sarah McArthur, Brand and Communications Manager