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Buying popular for small fleet operators

Arval 800
Arval says most mainstream fleets should be unaffected by the earlier ULEZ start

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17 September 2014

Mike, Waters, Arval
Mike Waters, senior insight and consultancy manager at Arval

UK SME fleet operators are atill buying instead of leasing their company vehicles and could be making a huge mistake.

That’s the conclusion drawn after new research by the Corporate Vehicle Observatory (CVO) Barometer by contract hire and leasing provider Arval which claims small businesses are exposing themselves to unnecessary risk and extra costs by buying.

The annual fleet research interviewed more than 4,500 fleet decision makers across 15 countries. It shows that for businesses with less than 10 employees, buying their vehicles is the most popular acquisition method by some distance with 70% employing this approach.

Arval claims the potential issues with buying are exposure to depreciation and the unpredictable used vehicle market, as well as a significant financial outlay which could have been reinvested into the core business. The research also shows that UK businesses do this to a far greater extent than their European counterparts where 49% purchase vehicles outright.

Only 24% of UK businesses with less than 10 employees opt to lease their vehicles to benefit from the certainty of a fixed monthly cost, reduced administration and balance sheet management.

Mike Waters, senior insight and consultancy manager at Arval said: “The advantages of vehicle leasing are as important to smaller businesses as they are to larger ones. However, smaller businesses don’t seem to have the same appetite to lease their company vehicles and realise these benefits.

“In many ways, small businesses can gain the greatest benefit from vehicle leasing because they are sometimes less able than larger companies to generate finance from other sources. As well as freeing up crucial capital, leasing provides an additional credit line which many aren’t taking up.”

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