The BVRLA has welcomed the publication of a new independent report from the IPPR think-tank on how the UK can grab the full opportunity presented by ultra-low carbon vehicles. The association was consulted during the drafting of the report and was particularly interested in its comments on the removal of 100% First-Year Allowances for lease cars:
3.1.3 Support for Leasing and Rental Companies:
Many interviewees argued that the key to promoting ULEV uptake lay in supporting leasing and rental companies, partly as a means of allowing the public to gain experience of ULEVs.
Most cars and vans are bought through some form of leasing or rental company. In 2011 58 per cent of new vehicle registrations were made by businesses, and of these registrations over 90 per cent were part of a fleet of 25 vehicles or more (SMMT 2012a).
In the fourth quarter of 2011, 74 per cent of fleets had vehicles financed on a contract hire basis, 22 per cent had vehicles financed on an ad hoc hire basis, and 19 per cent of fleets had vehicles financed on a finance lease basis (Experteye 2012). Furthermore, 66.5 per cent of consumers used either hire purchase arrangements or personal lease arrangements.
Therefore the changes made in the 2012 budget, which removed the availability of enhanced capital allowances for ULEVs to leasing and rental companies, have had a serious impact on the fiscal incentives available to support ULEV uptake, particularly by public sector bodies.23 IPPR has been told that the removal of the availability of 100 per cent first year capital allowances to leasing and rental companies could add 3 to 5 per cent to the cost of a car lease, or up to £15 per month on a £300 per month lease. For a fleet of 25 ULEVs financed over a four -year period, this adds a total of £18,000 to the cost of that fleet of ULEVs.
We recommend that the government immediately reinstate the 100 per cent first year capital allowance availability for leasing and rental companies.
Commenting on the report, BVRLA chief executive, John Lewis said:
"We are delighted that this independent report has recognised the vital importance of the vehicle rental and leasing industry in driving the uptake of ultra-low emission vehicles, something that the government has chosen to ignore.
"We will continue to lobby for them to reinstate 100% First Year Allowances for our sector. Sales of new ultra-low carbon vehicles will not progress as everyone wants them to unless this happens."
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For more information please contact:
Head of Communications, BVRLA
T: 01494 545700
M: 07979 756533