For the purposes of this report, the definition of the market encompasses only fleet services provided for passenger cars used either wholly or in part for business purposes. These can be funded and expensed by a company or supported through mileage allowances, soft loans and other forms of payment from the company to the employee.

The two categories included in this report are fleet cars – vehicles used by companies operating a fleet of 25 or more cars, including dealer demonstrators and Motability sales (a government-sponsored leasing operation for disabled people) – and business cars – vehicles operated by small businesses operating between one and 24 cars.

With such a high level of industry fragmentation it is not possible to review all fleet service providers in a report of this type. This report is not a directory of industry participants. The company profiles include a selection of operators rather than necessarily all of the largest industry participants.

For all financial periods commencing on or after 1 January 2005, all companies quoted on the London Stock Exchange or other European exchanges are required to prepare their consolidated financial statements using the International Financial Reporting Standards (IFRS). UK companies previously reported their financial statements under UK Generally Accepted Accounting Principles (GAAP).

All of the values quoted in this report are at current prices unless otherwise specified.

The term billion refers to one thousand million.

Some numbers in tables do not add exactly due to rounding.

Reports are researched and written by MBD’s in-house, specialist business-to-business consultants. Research is based on both an analysis of official information and on original, trade research, providing both a quantitative and qualitative view of the market. MBD’s unique range of frequently updated reports provide an integrated body of ongoing research, enabling deep understanding of the prevailing trends and of the drivers of these trends based on trade opinion.

The following abbreviations appear in this report:

The UK fleet services market is a significant component of the broader automotive industry, with fleet and business cars accounting for more than half of new car registrations in the UK.

The market is part of a larger vehicle leasing and short-term rental sector in the UK, which the British Vehicle Rental & Leasing Association (BVRLA) estimates generates approximately £15 billion in annual turnover.

Cars are widely provided to company employees for business use, where the frequency of corporate travel makes a vehicle a necessity. Major companies operate large fleets of more than 1,000 vehicles, while small firms may operate less than 25 cars. Company cars can be driven by the employee for business and private use, while pool cars are strictly for business use.

Larger firms typically acquire vehicles through a contract hire agreement with a leasing operator. This details a specific lease term, the mileage allowed and fixed monthly payments for use of the car. The company then returns the car at the end of the fixed period. In addition to the lease payments, the contract may include additional fleet management services, such as de-fleeting, provided by the leasing company. The benefits of a leasing agreement include these added-value fleet management services, spreading the cost through a fixed monthly payment arrangement and keeping the asset off their balance sheet.

In other cases, companies acquire cars through contract purchase, where the vehicle ownership transfers to the company after an agreed number of payment installments, or outright purchase. In the latter case, companies may still outsource fleet management services to a leasing company.

Employees who benefit from a company car must pay tax as a percentage of the value of that car for its use as a Benefit in Kind (BIK). The percentage of value they have to pay in tax depends on their salary level and the carbon emissions of the car.

Some companies that provide employees with a company car allow them to opt for a cash alternative rather than be restricted by corporate buying policies. These firms allow their workers a dedicated allowance, which is to be put towards a privately-owned car. This can be operated through a leasing company via an Employee Car Ownership scheme (ECOS). The employee has ownership of the vehicle and pays a monthly contribution towards its cost, though they do not pay BIK tax.

Another alternative is a car salary sacrifice scheme, where the company acquires the car through contract hire but reduces the employee’s salary and provides them with the car as a non-cash benefit. The employee pays BIK tax, but this can be less than the tax payment they would have made on the income sacrificed for the car. The employer benefits from paying lower national insurance contributions as their gross taxable salary bill declines.

The fleet industry is a major part of the broader automotive ecosystem in the UK. Car and component manufacturers benefit from higher output levels than otherwise required due to high demand for new cars from the fleet sector. Replacement cycles for corporate cars are generally shorter than for privately-owned cars, further boosting demand. The fleet sector usually leads new innovations in the market, with companies buying cars en masse and with greater frequency.

The car leasing industry is populated by both manufacturers and independent leasing companies, with major manufacturers, including Volkswagen and Mercedes-Benz, having a presence. Many operators in the market are subsidiaries of large financial services institutions, which have vehicle financing and leasing arms, such as GE Commercial Fleet Finance Services.

Leasing firms may offer finance solutions for the purchase of company cars, fleet services, or a completely outsourced fleet management solution. The latter has become more popular over the past decade, particularly among larger businesses.