The British Vehicle Rental and Leasing Association’s (BVRLA) leasing fleet has grown by 1.4% in 2024, primarily driven by the increasing demand for company-provided electric vehicles (EVs).
This growth has offset the reduced demand for personal lease agreements and vans, according to the BVRLA’s latest Leasing Outlook report.
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Salary sacrifice schemes have played a role in this growth, increasing by 51% and supporting the UK’s shift towards cleaner vehicle models.
The BVRLA leasing fleet now comprises 1.94 million vehicles, with business contract hire (BCH) representing the largest segment, growing by 6.3%.
BVRLA chief executive Toby Poston said: “Salary sacrifice is the zero-emission transition’s driving force. Its popularity continues to grow, bolstered by a wave of smaller, cheaper electric vehicles and innovative new leasing products providing second-hand EVs.
“More employers are seeing the appeal and more employees – at all income levels – can make the switch.”
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By GlobalDataBCH and salary sacrifice schemes benefit from favourable company car taxation on EVs, with benefit-in-kind rates confirmed through the 2029/2030 tax year. In contrast, personal contract hire (PCH) agreements lack similar incentives, resulting in slower EV adoption among individual consumers.
Market challenges such as higher interest rates, the cost-of-living crisis, and rising vehicle prices have contributed to a 15.1% year-on-year decline in PCH demand and a 3.6% drop in van demand, which now totals fewer than 500,000 vehicles. SMEs across various sectors have felt these pressures acutely.
Small and medium enterprises (SMEs) across sectors have also felt these pressures, leading to a 3.6% drop in van demand, now below 500,000 vehicles.
EVs were the most popular fuel type for new fleet additions in the third quarter (Q3) of 2024, accounting for 44% of new entries, compared with 23% for petrol.
In salary sacrifice schemes alone, 87% of new orders were for battery-electric vehicles (BEVs) in Q3 2024.
Despite the surge in EV uptake, concerns about declining residual values persist. Leasing and finance companies have absorbed much of the depreciation, raising questions about long-term sustainability.
In a recent development, the Association of Fleet Professionals (AFP) launched an online salary sacrifice course for fleet managers and leasing company staff, in partnership with BVRLA.
This initiative is part of a broader strategy to strengthen their collaboration, with more joint training programmes planned.
