The latest pricing for leasing packages on the Motability Scheme shows that customers are still getting good value in the face of rising motoring costs which are affecting UK drivers.
The Scheme offers people receiving a qualifying disability allowance the choice of a good value and accessible vehicle leasing package. As well as a new car, Scheme customers also benefit from insurance, breakdown assistance, servicing, maintenance, tyres and windscreen repairs as part of the package.
Increasing motoring costs and changes to the car market mean that Advance Payments for the more expensive vehicles on the Scheme have increased. Despite this, the Scheme remains good value and is, on average, 45% cheaper than other alternative leasing packages.
External factors
Motoring costs have risen in recent years, affected by inflation and other supply chain pressures.
The UK’s transition to electric, shaped by the zero emission vehicle mandate, means there are fewer petrol and diesel cars available and more electric cars are available. There is also low consumer demand for EVs and we know from our unique customer insight that there are concerns about affordability and accessibility, as well as the location of chargepoints. The sector is also affected by the continued repercussions of supply chain disruption created by the Covid-19 pandemic, when car parts were unavailable, and orders were delayed.
Car insurance costs have also significantly increased, and drivers faced an average 25% rise in insurance costs between 2022 and 2023. Rising energy and fuel costs have also affected businesses that supply breakdown assistance, maintenance and repairs. The cost of living has been increasingly challenging in recent years, meaning these increases are being sharply felt by drivers.
Motability Operations sells used vehicles at the end of a customer’s lease to fund new cars for Scheme customers. The value of used cars has declined, which means less money than expected is going back into the Scheme. Furthermore, the Scheme has grown to 800,000 customers which has required increased investment and borrowing to connect more people to the freedom and independence that the package provides. The interest rates for borrowing additional funds have increased alongside other rates, such as those for mortgages, which also affects the cost of the Scheme.
Scheme pricing and value
This means that the Advance Payments for the more expensive vehicles on the Scheme have increased, but the payments have not increased by as much as similar leasing packages outside of the Scheme. Some Advance Payments have decreased and there are 50 vehicle derivatives with no Advance Payment.
On average, the leasing package provided by Motability Operations, which runs the Scheme, is 45% cheaper than other leasing alternatives. The ongoing cost of the package is fixed for three years, which means nothing changes for Scheme customers if inflation and other factors change during that period.
Cost savings comparison, based on the most common type of Scheme customer (an older man, living in a town outside of a city driving around 8,000 miles a year) seeking a similar leasing package:
- Predicted most popular: Nissan Qashqai Automatic – save up to 27% (£5,254)
- Small petrol car: Skoda Kamiq – save up to 12% (£1,804)
- Small hybrid car: MG MG3 – save up to 19% (£3,087)
- Small electric car: Dacia Spring – save up to 28% (£3,653)
- Large electric car: Renault Scenic – save up to 41% (£9,173)
- Large petrol car: Nissan Qashqai – save up to 28% (£5,116)
Motability Operations works with manufacturers and other suppliers to negotiate and manage costs so that it can provide a wide choice of makes and models at good value for its customers. In addition, Scheme customers have previously been shielded by inflation previously, using money from higher than expected used car values to fund £750 New Vehicle Payments for all 800,000 customers. The one-time New Vehicle Payment is available to new customers until 3 January 2025 and to existing customers when they next renew, if they haven’t already benefitted from it.
Andrew Miller, chief executive of Motability Operations, said:
“Drivers are seeing increasing costs across the UK due to rising inflation and energy costs, and the need for car manufacturers to meet sales targets as the UK transitions to electric. We do not exist in a silo and these market factors and costs affect what we can offer our customers.
“We’re working with car manufacturers and our partners with the aim of providing our customers with stand-out value and the Scheme is 45% cheaper on average compared to alternative options.
“During this period of rising costs and an unprecedented period of change for the car industry, we’re committed to ensuring the sustainability of the Scheme so that we can continue to keep our customers connected now and in the long term.”
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