Fleets get positive about life post-pandemic as car manufacturers close in on capacity

Fleets get positive about life post-pandemic as car manufacturers close in on capacity

After a year of ups and downs thanks to you-know-what, there’s finally some good news for the automotive industry, and fleets in particular.

March’s figures are in, and we can confirm that just a year on from Lockdown 1, most car manufacturers are operating close to capacity once more.

As you’d probably expect, production continues to lag behind the five-year average for March – by just under 23% - but more than 63,000 more vehicles were manufactured on British shores this March compared with 2020.

The Society of Motor Manufacturers and Traders (SMMT) is calling it the first “major step in the right direction”.

Which MUST be good news, considering the UK’s automotive industry lost £11 billion worth of production during the last year…

Positive news for manufacturing, positive news for fleets

New data from the Arval Mobility Observatory barometer suggests that fleets are feeling the effect of the uplift too.

They asked managers and decision makers whether the number of vehicles in their fleets would increase or decrease over the next three years. Larger fleets (500+ employees) returned a more positive response than expected, with 59% stating they expect growth.

And there are three main reasons why:

  • Company growth or branching out into areas that require vehicles (67%)
  • Covid-based distrust of public transport leading to employees wanting a safer commute (34%)
  • And more employees becoming eligible for company cars (32%)

SMEs slower to get in on the act?

The positive responses to Arval’s research were much more noticeable among larger corporations than SMEs. I

t’s possible that smaller enterprises – who’ve been focused on simply making it through the pandemic – could have spent less time weighing up the tax benefits of the upcoming combustion engine ban.

Still, there was a small increase in the positive responses from small and medium sized businesses – up by 8% compared with last year’s survey.

And the great news is that only 11% of all respondents expect their fleets to decrease in size.

Of those, a surprisingly small number – just 38% - put that down specifically to an increase in telecommuting. Meanwhile, half claimed any reductions will be caused by the general long-term impact of the pandemic.

EV switch driving the numbers

11% of respondents mentioned tax decreases as a reason for their expected fleet growth over the next five years.

Makes sense as by then we’ll only be four years away from the ban on new sales of combustion engine vehicles, and more and more companies will be making the switch to electrification.

The lower EV taxation levels in the run-up to the ban will likely result in more employees having company cars, causing those currently taking cash allowance to opt for salary sacrifice schemes instead.

And there’s one more positive bit of news for fleets on that front too… Demand for hybrid, plug-in hybrid and EVs increased 13.7% year-on-year in March, making up 20% of the UK’s entire vehicle production!

As the ban draws ever closer, supply and demand increases and prices continue to come down, fleets should soon start to see more choice in the EV market. So where have you got to in your electrification journey?

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