It is claimed that 1.4 million vehicles on the roads were bought by SMEs at a cost of £2.4 billion.
Now, the British Vehicle Rental and Leasing Association (BVRLA) is asking such companies to consider contract hire.
Director general John Lewis said: ‘The reluctance among small and medium business organisations to adopt modern acquisition methods for company vehicles is potentially a serious matter. The sums of money involved are staggeringly high and I wonder how many bosses in these organisations, or their advisers, genuinely understand the alternatives and how much the release of funds into their core business activities might boost them.
‘Add to that the lost potential benefits of greater safety and better budgeting in their car operations and this looks increasingly like a factor that is seriously holding back the sector’s growth potential.’
The BVRLA says the benefits to larger firms of using contract hire are the same as for smaller companies. These are the removal of risk in areas such as residual value, maintenance and interest rates, known budget expenditure for three or four years and the release of funds to boost investment. It claims contract hire companies are also able to negotiate better deals for new cars as they buy so many every year.
Mr Lewis added: ‘The case for SMEs moving towards some form of contract hire seems inescapable, especially at a time of such economic uncertainty. We have already seen three interest rate hikes in recent months and current predictions are for more to come very soon.’