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Is it time to consider used car leasing?

Shaun Sadlier, Arval 2017

Used vehicle leasing has been around for a while but has never made a huge impact. However, at Arval, we believe the time is right for that to change.

Why? There are a number of factors at play but the main one is the vehicles themselves. Not very long ago, a two or three-year old car or van that had already been through one fleet life tended to show signs of that use.

Now, improved durability means a properly maintained vehicle is, in many ways, difficult to differentiate from a new one. It might be second hand but it is no way second best.

Another factor is price. Leasing rates have increased in the past couple of years, prompted by everything from the fact that new cars have simply become more expensive to greater uncertainty over residual values.

However, the monthly rates on a used car can be up to 30% lower than the equivalent new model and this is a large enough difference to make many customers consider the proposition.

At the same time, leasing habits have changed. Growth in private lease means we have more short-duration, high spec vehicles coming back to us which are in great condition and perfect for re-leasing.

Other leasing companies will have seen a similar trend.

The disadvantages are few. Really, the main one is vehicle choice. No leasing company is able to provide an exact model, colour and spec in the same way they can for a new car. It is more a question of what’s in stock at any given point in time.

For this reason, it is difficult to see used leasing becoming part of a normal acquisition policy for major fleets – there is simply not enough standardisation. 

However, where we see the vast majority of leases being written is for SMEs and for personal contract hire.

Here, someone acquiring one or just a handful of vehicles is likely to be much happier choosing from a range of models that is attractive but not necessarily hand-picked.

At Arval, we’ve got our own used car leasing product and we are excited about its potential impact.

While it is likely to only form a minority part of our overall business mix, it is an attractive offering which, we believe, could be ideal for the market at this point in time.

By Shaun Sadlier, head of the Corporate Vehicle Observatory, Arval