Surge in demand for contract hire, says 2021 Arval Mobility Observatory

New research from Arval predicts a huge surge in demand for operating leases over the next three years.

More than half of businesses (51%) are ‘certainly or probably’ planning to introduce or increase their use of operational lease to fund their vehicle fleet by 2024, according to the Arval Mobility Observatory (AMO) study, up from just 26% in 2020. In 2019, the proportion was just 12%.

One in five (20%) said they would ‘certainty’ be increasing their use of leasing, up from just 6% a year earlier.

Shaun Sadlier, head of Arval Mobility Observatory in the UK (picured above), put the dramatic rise down to the economic and financial uncertainty caused by the coronavirus pandemic.

“With what’s happening in the economy, companies are considering how they best use their capital: do they spend it on plant and machinery or a vehicle that depreciates?” Sadlier asked.

“The fact that operating leasing gives a fixed cost is an added advantage and electric vehicles will also play a part in this. An outright purchase fleet will have a good idea of the value of their vehicle, but EV data is still being built so they will potentially look to put that purchase on an operating lease.”

The larger the company, the more likely it is to switch to operating lease, with 80% of businesses with more than 1,000 staff showing a propensity to favour this funding method compared to 21% of businesses with fewer than 10 staff

“An underlying message from this is that many companies appear to be actively looking at new acquisition methods as we transfer into the post-pandemic economy,” Sadlier said.

In-depth analysis of the AMO is in the April issue of Fleet News, including why fleets are optimistic about the future and why salary sacrifice is back in demand