After the overblown hype of the past two years, salary sacrifice seems to have gone into a hiatus this year, with fewer press releases announcing new deals.
Even the critics have gone quiet, perhaps satisfied that this ‘new fad’ is receding.
Not so, according to one of the salary sacrifice pioneers, Tusker.
The silence is more to do with protracted negotiations with company bosses – gestation periods are commonly one year-plus – rather than any diminishing of demand.
Tusker had planned to end 2011 with 70-80 schemes in place; it finished with 65.
However, growth has accelerated this year, putting the company on 90 schemes with another cluster expected to sign by year-end.
“We are launching with companies now that we were talking to last year,” says Tusker chief executive David Hosking.
“The delays were down to pensions issues and companies changing their priorities.”
He adds: “Cars are the most emotive discussion you can have and when you combine that with payroll reductions you have to get it right.
"Employers can be nervous; they want to introduce more benefits for staff but they want to partner with someone who can reduce the administration.
“Our 90 live schemes give them comfort that we are getting it right and we are picking up a lot of business from referrals from existing customers.”
Tusker’s salary sacrifice fleet has grown to 50% of its total risk fleet compared to 10% in 2010.
However, the new salary sacrifice contracts have taken a while to manifest in net growth; Tusker’s fleet hovered around 6,000-plus for a number of years, but a change in policy taken four years ago explains this apparent inertness.
“Funding has been tight since 2008/09 and we made a strategic decision to play safe,” Hosking says.
“Anything that was multi-supply, where price was the main factor, we cut loose.
"We also dropped brokerage cars and this gave us the funds we needed to grow our salary sacrifice business.”
Over the past three years, Tusker has ended deals with companies worth several thousand vehicles, all described as “low-margin, price-sensitive and non-maintenance”.
More profitable sole supply
It filled the gap with “more profitable” salary sacrifice and sole-supply, with-maintenance contract hire deals.
The move has left the company with “only half a dozen” dual-supply deals; Tusker is the sole supplier for the rest of its customers.
Former Alphabet director of international operations Mark Sinclair, recently appointed chief operating officer,
says changing market conditions helped Tusker to pursue this strategy.
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Bauer B2B group editor Stephen Briers has been an automotive business journalist since 1995. He has been editor of Fleet News since 2009 and before that was editor of Automotive Management for almost seven years. He now oversees both brands, as well as RAIL magazine.
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