Fleet News

Survey shows move to leasing as changes in VAT take effect

MORE companies are switching to leasing their cars rather than purchase and the trend is set to continue, according to an independent survey of 3,000 businesses commissioned by Ryland Multifleet. The survey revealed that during 1997 there was a 7% drop in the number of organisations exclusively purchasing cars compared to 1996 and a corresponding 4.7% increase in organisations leasing.

As a result outright purchase and leasing is equally popular with 43.9% of those surveyed each opting for one or other of the methods with the remaining fleets operating a mixed policy. This is the latest survey to reveal a continuing rise in fleets opting for contract hire largely on the strength of changes in VAT regulations which came into effect on August 1, 1995 making leasing usually cheaper than outright purchase.

The survey divided fleets into five size categories starting at under 10 and rising to more than 100 cars. The largest growth area for leasing was in the 10-19 fleet sector at 7.7%. However, similar ratios were reflected across all fleet sizes.

Nevertheless, the trend of earlier surveys 'the largest the company car fleet, the more likely to lease' continued to be a dominant factor. Ryland Multifleet manages 12,500 vehicles and managing director David Bourne said: 'The contract hire market will continue to grow, and it is good to see the smaller businesses latching on to the opportunity for cost savings and all the other benefits. Once a company has opted for contract hire, they should have no reason to go back to purchasing their cars.'

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