An increasing number of small-medium sized companies are turning to leasing their cars and vans in order to free up capital.
Arval, the vehicle leasing and fleet management company says that the trend is being driven by a number of impulses but includes a desire to invest or improve cash flow.
Paul Marchment, SME development manager, said: “Penetration of vehicle leasing into SMEs has been increasing for a number of years, driven by factors such as certainty around budgeting and a desire not to take a risk on vehicle depreciation.
“Freeing up capital has always been part of this mix but we have seen a definite increase in this area over recent months. Certainly, there appears to be a growing number of SMEs which have previously bought cars and vans but now have other priorities for that money.”
Paul said that Arval supported SMEs in choosing between outright purchase and vehicle leasing through its consultative approach, including an award-winning self-serve online comparison tool designed to help businesses make this decision on individual vehicles.
“It is very interesting to go through the decision making process with small and mid-sized businesses in such a structured way. Most find that buying vehicles, once all the costs have been taken into consideration, can be less cost efficient than they imagined.
“However, as a business, we tend to not just focus on the cost aspect of leasing versus purchasing but the associated benefits. Certainly, leasing allows businesses to improve their cash flow by not tying up money in vehicle assets. That cash can be used for a wide variety of purposes, from investment in new projects or additional employees through to simply creating a ready financial cushion.
“A degree of uncertainty surrounds overall general economic prospects in the UK and elsewhere which can quickly influence the used vehicle market, and an increasing number of businesses would rather pass that risk to an expert in the shape of a leasing company.”
Arval’s outright versus leasing calculator can be found at https://calculators.arval.co.uk/#/
Pictured above: Arval’s Paul Marchment