Government financial support remains vital to the survival of many firms in vehicle rental sector after Covid-19 'destroyed' the leisure market.

That’s the view of the British Vehicle Rental and Leasing Association (BVRLA), which has published its latest Business Impact Survey, ahead of today’s Budget.

The survey provides a snapshot ‘state of the industry’, which highlights businesses’ continued reliance on three key Government support measures: the furlough scheme; business rates relief; and deferred VAT payments.

The BVRLA has written to the Chancellor, Rishi Sunak, requesting continued support in these three areas.

Sunak will announce the extension of the furlough scheme until the end of September in the Budget. It remains to be seen what other measures he introduces to support the industry.

BVRLA chief executive Gerry Keaney said: “The vehicle rental sector has continued to make a vital contribution by keeping goods and people moving during this pandemic.

“At the same time, it has been disproportionately hard hit by restrictions on travel and movement, resulting in a cliff-edge drop-off in the leisure customers that generate around 40% of all UK vehicle hire transactions each year.

“With the vaccination programme underway and the roadmap out of lockdown now laid out, the sector is feeling more confident that the tide will turn in the next 6-months. Until then, it needs continued support from Government.”

In the BVRLA survey, more than three-quarters (77%) of vehicle hire firms reported a fall in annual sales transactions, with just over a quarter (26%) seeing transactions plummet by more than 50% compared to 2019.

The adverse market conditions also led to 70% of rental firms reducing their workforce, many by more than 25%.

According to the latest Office for National Statistics latest indicators for the UK economy, 20% of UK businesses’ workforce were on furlough leave in early February, up from 18% in mid-January 2021, and official HMRC statistics published on 25 February show that the estimated number of jobs furloughed in January was 4.7 million.

The request for extended Covid-19 business support followed an earlier pre-Budget submission, which calls for three measures to support the fleet sector’s recovery to help accelerate the move to a net-zero road transport system: a one-year freeze in Vehicle Excise Duty (VED); lock in the previously announced benefit-in-kind freeze and publish 2025-26 rates; and create a ‘Green Investment Allowance’ to unlock private investment in electric vehicle charging.

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