Zenith grows fleet but profitability hit by used vehicle values

Zenith’s profitability has been hit by continued lower residual value (RV) profits of the disposal of vehicles.

While its corporate funded fleet grew by 5.8% year-on-year, with 166,000 vehicles under management, the vehicle leasing company has suffered due to volatility in the used car market, particularly with electric vehicles (EVs).

While underlying adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) excluding RV profits was up 14.2% year-on-year, adjusted EBITDA was £42.2 million, down 34% year-on-year when the values of the vehicle disposals were taken into account.

Zenith’s annual financial results for the year ending March 31, 2025, show the impact of the used market on the vehicle leasing sector.

Just last week, Lex Autolease, part of Lloyds Banking Group, reported a £10.6m loss in its annual accounts, just three years after pre-tax profits hit more than half a billion pounds.

The vehicle leasing giant – ranked second in last year’s Fleet News FN50 – blamed the decrease in reported profit on a combination of factors.

They included an increase on underlying depreciation charges on the funded fleet, lower profits on the disposal of vehicles, particularly EVs, and an increase borrowing costs from interest rate rises.

The average used EV price has fallen 46% between 2021 and 2024, compared to 19% for cars with an internal combustions engine (ICE), according to the British Vehicle Rental and Leasing Association (BVRLA).

Its recently released annual Road to Zero report, claimed that the UK’s EV future hangs in the balance, with used values “falling relentlessly”, costing the fleet and leasing sector hundreds of millions of pounds.

And, while welcoming the Government’s new electric car grant, the BVRLA has warned that without incentives to help stimulate the used market alongside the new EV market, it could put further downward pressure on RVs.

Battery electric vehicle (BEV) concentration in Zenith’s corporate and consumer funded fleet remains balanced, it says, comprising 47.5% (28,631) BEVs.

Zenith was ranked seventh in last year’s Fleet News FN50, with a risk fleet of 69,492 cars and vans.  

In an effort to protect margins, Zenith has previously reported that one-in-three BEV contracts have been formally extended as part of Project Volt, the group’s lease extension programme to address the decline in used plug-in prices.

Zenith reports continued progress with Project Volt, creating £10.8m of value since its inception in 2024.

Richard Jones (pictured), Zenith chief executive officer, said: “Against an uncertain economic backdrop, we continue to focus on delivering our strategy and influencing the financial and operational metrics we can control, an approach which has seen our underlying business strengthen, as we continue to win new contracts.

“For the third consecutive year, we’ve grown our corporate funded fleet, with salary sacrifice up 10.4% year-on-year, supported in part by the Government’s renewed commitment to benefit-in-kind incentives on BEV cars.

“Our commercial division continues to deliver strong performance while continuing to expand its mobile maintenance offering to support growing customer demand.”

He concluded: “As I reflect on my first few months as CEO, I am impressed by the strength and resilience of the Zenith Group, underpinned by the expertise, commitment and efforts of our talented colleagues.

“Thank you to everyone who has supported Zenith this year and I am confident that by working together as a team, and alongside our customers and partners, we can continue to make strategic progress.”