Plans for Meridian Vehicle Solutions to switch a large part of its fleet to plug-in hybrids has been shelved after the Government announced plans to remove grants designed to encourage take up.
The company already has a number of plug-ins on order including the Mini Countryman PHEV, BMW 530e, BMW 225xe and Kia Niro that will still attract the grant – but says that future additions are looking very unlikely in the current circumstances.
The Government said the reduction in funding - from £4,500 to £3,500 - for the cleanest cars, and withdrawing the grant completely for the likes of the Mitsubishi Outlander PHEV and the Toyota Prius Plug-in, was a sign of its success.
Phil Jerome, managing director, explained that because Meridian works on a medium-term hire model, the move will hit it harder than most other fleets and would potentially add hundreds of pounds per month to the price of any non-grant plug-in that it offered.
He said: “This is really disappointing. There is rapidly growing demand from fleets for plug-in hybrids and we made a strategic decision earlier this year to meet that need. The dozens of vehicles that we already have on order will, we are sure, easily be placed on lease.
“Really, we are trying to establish these vehicles as the mainstream, even the obvious, fleet choice. However, by removing the grant, the Government has effectively added £2,500 to the purchase price of any future cars that we were thinking of adding to our fleet.
“The truth is that the maths no longer stack up. Our hires generally run from three months to a year and, over that period of time, it puts hundreds of pounds every month on every vehicle, meaning that the pricing is no longer commercially viable.
“It leaves us in a very odd and frustrating position, where we are able to supply the current plug-ins that we have on order to fleets that want them – but then will probably have to step back from the plug-in market unless manufacturers cut prices.”
Jerome says that the Government’s move was hard to understand and added to a general feeling of instability around current fleet planning.
“The grant removal will apply in just a few weeks, so it gives fleets almost no chance to plan and consider what we are doing in a strategic manner,” he said.
“The grants that are now available for plug-ins apply only to cars with a 70 mile electric range and there almost no models on sale that meet that criteria. It means that there is a good chance that adoption will slow right across the sector.
“With WLTP, company car tax and the cut in grants – all occurring against the backdrop of Brexit - it is difficult not to feel that the Government is intent on making life as difficult as possible for fleets at the moment.
“What we need – what we crave – is a level of stability that will allow us to plan better for the immediate and longer term future. Ideally, although I suspect the chances of this happening are very low, we’d like to see the grants decision reversed at the Budget.”