Leasing trends Pt 2: The future of funding

Funding will need to become increasingly flexible to enable fleet decision-makers to tackle the myriad challenges facing their operations.

The overwhelming view from FN50 leasing companies is that they will be able to offer a wider range of services, be adaptable in their agreements and step-up their support for UK businesses. Subscriptions models could play a bigger role, although some are sceptical about this supposed ‘new’ form of finance.

Lakshmi Moorthy, Arval UK managing director, sums up the view of many when she points to the impact of the coronavirus pandemic, which has revolutionised views on office/home working as well as being a major reason behind the lengthening vehicle supply times. She says: 

“The pandemic has seen many rethink where they choose to live, with increased homeworking in job roles where it’s possible and an element of financial uncertainty post-Covid-19 – flexibility is therefore a key matter for funding.” 

“Getting more for less is an important factor for funding choices, so customers are likely to be more open to funding choices that are tax friendly. This is what we see in the case of salary sacrifice (sal/sac), where the low benefit-in-kind (BIK) tax has opened up electric vehicles (EVs) to a wider audience, particularly those who are not eligible for a company car.”

Sal/sac terms are typically over a two- or three-year period and are viewed as a way for employers to attract and retain staff.

Novuna Vehicle Solutions is seeing sal/sac, once the preserve of larger corporates, cascade down to smaller companies, buoyed by low taxation levels.