Why leasing reduces risk at a time of technological change

Why car leasing reduces risk (particularly at a time of technological change)

The reasons for financing your fleet via leasing are well known. The benefits include freeing up capital from depreciating assets, saving money on fuel and maintenance costs, ease of fleet management, increased flexibility and the provision of new, safer cars.

However, an increasingly key reason for leasing, rather than buying a company fleet is the rapid evolution of new car technology, and the improvements in efficiency and emissions that this brings.

At a time of significant technological change within the automotive industry, and ahead of the 2035 ban on the sale of petrol and diesel cars, fleets are beginning to transition to ultra-low emission vehicles. And while this brings a host of benefits to companies, it can potentially bring with it a degree of complexity for fleet managers.

With lots of questions around what electric and hybrid vehicles mean for your fleet, leasing a company fleet is the simplest way to reduce the risk that’s inseparable from significant change.

New car technology and the impact on selling fossil-fuelled cars

Until recently, diesel cars were likely to have made up a significant proportion of any company fleet. Yet sharply declining diesel sales – down to 124,000 in 2022 compared to 1.3 million in 2016 – make it clear that the market is shrinking as it falls out of favour with drivers. As a result of this, an obvious risk to fleet managers is that diesel vehicles are exposed to lower residual values when they come to be sold.

But what about petrol cars? Will these less polluting vehicles hold their value better over the same time-frame? Possibly not. With the government’s goal of a net zero economy supported by a move to zero emission cars, the writing is very much on the wall for fossil-fuelled vehicles of all kinds. As consumers begin to turn to electric vehicles in ever larger numbers, the market for petrol and diesel cars looks set to continue to shrink. In short, this paradigm shift in consumer habits risks leaving your organisation with much smaller end-of-life returns.

Benefits of leasing electric or hybrid vehicles over buying

If you’re ready to switch to more environmentally friendly cars, you could simply replace petrol and diesel vehicles with EVs or hybrids. However, the purchase price for these vehicles can be higher than internal combustion vehicles. While purchase prices are falling year on year as the volume of EVs and hybrids sold continues to build, alongside the lower total cost of ownership that these vehicles enjoy, it could still represent a higher capital outlay if a company buys its fleet vehicles outright, rather than leasing.

While there is a strong used EV market currently, thanks to the production delays for new vehicles, whether or not this will remain the same in three to five years’ time when the market frees up is still unclear, once again, representing a risk for EVs that are owned, rather than leased.

With the 2035 ban on petrol and diesel vehicles now only a few years away, there is no doubt that company fleets will need to transition away from petrol and diesel at some point, with EVs and hybrids becoming the standard.

ULEV leasing – the best of both worlds

At a time of rapid technological change, leasing is the most secure option for your fleet.

Your organisation and drivers will benefit from:

• Less time spent charging – getting their hands on a brand new car with the latest technology means the latest in batteries and the associated improved performance. Newer cars have higher possible charging speeds, which means less time waiting for drivers.
• Reduced business mileage – with many hybrid vehicles achieving 96mpg and battery-electric vehicles costing significantly less to run than petrol or diesel vehicles, moving to ULEVs will also save your organisation significant business mileage sums.
• Complete confidence in your fleet costs – with a single monthly figure covering the complete cost of each car (minus the fuel/energy) and no need to consider the resale value at the end of the agreement, you can rely on your projected fleet costs.
• Carbon footprint reduction – ultra-low emission vehicles are a great way of boosting your company’s ESG goals, while reducing its carbon footprint. Partner with Tusker and we’ll also offset the emissions of any vehicles that you may still have on fleet, making all your vehicles completely carbon neutral.
• The option to extend your car benefit to all employees – via a self-funded salary sacrifice scheme. This is an attractive benefit for many employees and gives people who could not otherwise afford a brand-new car the opportunity to drive one. Plus, it can help attract and retain new and existing employees.
• All the usual leasing benefits – including a comprehensive maintenance, servicing and insurance package included within a single monthly payment.
• Even more risk reduction with our Lifestyle Protection scheme – work with Tusker and you’ll further reduce the risks associated with life events like parental leave, death or illness. You will not need to worry about being stuck in long-term contracts for unwanted vehicles.

Car leasing might not have been on your radar in the past, but with significant changes occurring within the automotive landscape and the future of fleets, now is the time to consider making a change.

Partner with Tusker – an experienced, award-winning, market-leading provider – and we’ll help you transition your fleet seamlessly to the next generation of vehicles.

Interested in finding out more? Get in touch