More SME's turn to leasing to fund company vehicles

Small-medium sized enterprises (SMEs) in the UK are increasingly turning to leasing as a means of funding company cars and vans, new research shows.

The 2020 Arval Mobility Observatory Barometer indicates that almost a third (31%) of UK companies with 10-99 employees are planning to implement or use more operational leasing – also known as contract hire – in the next three years compared to just 8% when asked in 2019.

Shaun Sadlier, Head of Arval Mobility Observatory in the UK, said: “The responses from SMEs indicate a massive increase of the propensity, year-on-year, to use operational leasing.

“The use of this kind of leasing has been gradually increasing across the market for a long time, certainly during the 20 years or more I have been involved, but here we see signs of a potential leap rather than further incremental movement.

“The changes are large enough to suggest a genuine shift in attitude and it would be fascinating to carry out more research into this area. Operational leasing has very clear advantages for SMEs – predictable costs, the avoidance of residual value risk, easy packaging with other key vehicle services and more – and one or all of these factors appear to be really gaining favour.

“What is also interesting is that this research was carried out just before the coronavirus crisis. In a business future where there will undoubtedly be increased and perhaps substantial pressure on budgets for companies of all sizes in the short and medium terms, there is every chance that operational leasing will look even more appealing.”

Shaun said that it was interesting that SMEs were also turning to leasing companies for advice in what appeared to be increasing numbers.

“Companies such as Arval have invested very heavily in recent years in providing a more consultative approach for companies of all kinds and this has been especially beneficial in supporting the SME sector. This research shows how that effort is beginning to pay dividends.

“Across the 20 countries that are included in the overall Arval Mobility Observatory Barometer, an increasing part of Arval’s business is with SMEs, and they represent a very important and potentially growing part of the company car and van market.”

The main question asked in this section of Arval Mobility Observatory Fleet Barometer was whether companies were planning to implement or to use more operational leasing during the next three years. The responses in 2020 were 31% for 10-99 employees and 11% for fewer than 10 employees, compared to 8% and 10% respectively for the same question in 2019.

The 2020 Arval Mobility Observatory Fleet Barometer sought feedback from 5,600 businesses across 20 countries, including the UK, of which 159 had fewer than 100 employees.

Are you planning to implement or to use more operational leasing now or in the next three years?