Contract hire expected to 'leap' for company vehicles - Fleet Summit
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  • Contract hire expected to ‘leap’ for company vehicles

    960 640 Stuart O'Brien

    A leap may be about to occur in the use of operational leasing 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, also known as contract hire, 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.”
     
    Sadlier 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 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

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    Stuart O'Brien

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