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31% of UK SMEs turn to contract hire to fund company vehicles, says Arval Mobility Observatory

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Some 31% of UK SMEs plan to implement or use more contract hire in the next three years compared to 8% when asked in 2019, says the Arval Mobility Observatory.

Defined as companies with 10-99 employees, the SMEs are increasingly turning to leasing as a means of funding company cars and vans and are also turning to leasing companies for advice in increasing numbers.

Shaun Sadlier (pictured), head of the Arval Mobility Observatory in the UK, explained: “The responses from SMEs indicate a massive increase of the propensity, year-on-year, to use operational leasing. The use of this kind of leasing has been gradually increasing across the market for a long time, certainly during the 20 years or more I have been involved, but here we see signs of a potential leap rather than further incremental movement.”

The 2020 Arval Mobility Observatory Barometer revealed that SMEs are increasingly turning to contract hire as a means of funding company cars and vans with 31% of companies with 10-99 employees planning to implement or use more contract hire in the next three years. This is compared to only 8% for the same question in 2019.

Furthermore, 11% of companies with less than 10 employees planned to implement or use contract hire in the next three years, compared to 10% in 2019.

“The changes are large enough to suggest a genuine shift in attitude,” Sadlier added, “and it would be fascinating to carry out more research into this area. Operational leasing has very clear advantages for SMEs – predictable costs, the avoidance of residual value risk, easy packaging with other key vehicle services and more – and one or all of these factors appear to be really gaining favour.

“What is also interesting is that this research was carried out just before the coronavirus crisis. In a business future where there will undoubtedly be increased and perhaps substantial pressure on budgets for companies of all sizes in the short and medium terms, there is every chance that operational leasing will look even more appealing.”