SALARY sacrifice schemes are failing to fulfil their potential as a result of current conditions as initiatives are being badly affected by a range of factors including highly restricted electric vehicle supply, rising lease costs and the state of the wider economy – as well as a lack of engagement by some providers.
Association of Fleet Professionals chair Paul Hollick said: “We’re picking up a general sense of disappointment from our fleets around salary sacrifice. This isn’t to say that there aren’t successful sal sac schemes out there but there seems to be a widespread agreement that many just haven’t taken off in the manner that employers had hoped thanks to a whole series of problems.
“Pricing, supply, the economy and service are all issues. These schemes are generally built on low personal taxation for electric vehicles (EVs) and as everyone knows, lease rates for these cars have increased quite dramatically while waiting times continue to lengthen. This seriously affects the basic attractiveness of sa lsac for employees.
“Affordability is being additionally affected by wider economic conditions when people feel their personal finances are increasingly under pressure. There’s a potential question emerging about whether businesses should even be promoting sa lsac at a time when some people may be struggling to meet their heating bill or their mortgage payment.
“Finally, while there are good sal sac companies out there, of course, others are proving to be less effective. From member feedback, this appears to be especially the case where providers have promised to put a scheme in place with almost no assistance from within the host company’s fleet, HR and procurement departments. In our experience, to make salsac work, there needs to be a proactive partnership between the provider and the employer.”
Hollick said that the core idea of sal sac remained attractive but until these issues were resolved, it was difficult to see take-up among employees improving markedly.
“Just a few months ago, many fleets were hoping that that their salsac scheme would be an effective doorway to help those on middle and even lower salaries get into a new EV – especially if those people were part of the grey fleet – but the numbers are just not currently adding up. This is often the case even when manufacturers offer significant levels of support.
“None of this is to undermine the concept of salsac. It remains an idea with huge attractiveness for fleets but issues such as poor EV supply, rising lease rates, the general state of the economy and individual service issues are genuine problems and it is difficult to see salsac fulfilling its considerable potential across the fleet sector until these improve.”
