Sale and leaseback, also called ‘purchase and leaseback’ or simply ‘leaseback’, is where a business sells its vehicles to a lessor and continues to use them under the terms of a lease.

“Capital injection aside, sale and leaseback provides a very quick mechanism to simplify fleet administration and budgeting, and places all vehicles on the same footing overnight,” explains Ross Jackson, managing director of Fleet operations.

Hall adds: “It is also attractive to organisations as a means of mitigating risk, protecting them from exposure to the volatility of the used car market and the uncertainty of residual values that comes with it.”

Sale and rentback, available from Northgate, also allows you to release the capital tied up in purchased company vehicles so that you can invest it back into other areas of your business.

In addition, it offers you all the benefits of renting - such as regularly renewed vehicles, no depreciation worries, reduced administration needs and zero maintenance hassles. However, the key difference between ‘leaseback’ and ‘rentback’ - Northgate is believed to be the only rental firm offering the product - is that no contract is involved.

• Pros: quick release of capital; simplify fleet administration; removes residual risk; and removes vehicles from balance sheet.
• Cons: decrease in the value of your assets; and vehicles no longer belong to you.

Case study: Luminar Group Holdings

Luminar Group Holdings appointed Lombard to restructure it fleet operations by buying and leasing back the company’s existing car fleet.

Running prestige cars including the Audi A4, BMW 3-Series and Mercedes-Benz C-Class, Lombard now funds its 60-strong fleet on a fully-maintained contract hire basis as the sole supplier.

The company is also providing ongoing consultancy on environmental and taxation issues, as well as risk management.

“They made a clear business case for taking the leasing route, which provides a welcome injection of cash,” said Luminar commercial director Andy Marks.