The commercial vehicle market is undergoing a remarkable transformation.
Where employees could easily choose spacious electric SUVs a few years ago, they are now more often confronted with more limited models. The cause lies in the evolving market, increased costs and tax regulations. Those who are allowed to choose a car again after a lease period will notice that large models such as the BMW iX3 or Audi Q4 have had to make way for more compact alternatives such as the BMW iX1 or the Volvo EV30.
smaller models
Around the corona pandemic, a striking trend emerged in the leasing market. Electric cars became the norm, partly due to the tax benefits associated with them. Large, luxurious models with a long driving range and many options suddenly topped the list of company cars. Employees who were allowed to choose a new car at the time could opt for cars such as the Volvo XC40, VW ID.4, Mercedes EQB or the Skoda Enyaq IV80.
That image has changed drastically today. “The cars you could choose from a few years ago have moved up in the categories of company cars,” says Hendrik Serruys, partner at consultancy firm EY. “It can now happen that you get promoted and still find the same car models in a higher category. Or that you can no longer choose the same car after your lease period has expired.”
The BMW iX3, once a popular choice among electric company cars, has become out of reach for many employees due to price increases. The iX1 is now one of the most chosen models in the lease category, together with the Volvo EV30. The range in the middle class has been significantly expanded, which has brought more luxurious and larger cars into a higher price segment.
tax rules
An important factor in this evolution is the changing tax system. Since mid-2023, cars with a combustion engine are no longer tax deductible, which is why many companies have accelerated the electrification of their fleet. Stijn Blanckaert, director of Renta, the federation of leasing companies, confirms this trend: “At that time, many brands only had one electric model and these were usually the more expensive options. Today, the market is more mature and more affordable electric models are available.”
For example, Skoda introduced the Elroq as an alternative to larger models. Volkswagen offers the ID.3 as a successor to the Golf. Employees who used to be able to choose a spacious SUV now often have to settle for a more compact model within the same category.
impact on the leasing market
Not only taxation, but also rising costs play a role. Leasing company Arval analyzed the evolution of costs and came to striking conclusions. "In 2021, a BMW 3 - the fleet car par excellence - still cost 1.009 euros per month for an employer," says Tony Peetermans of Arval. "At that time, anyone who wanted to drive electric could only choose the iX3 at BMW, which cost 1.206 euros per month. Today, that model has become even more expensive, and the iX1 is more often chosen."
From an article in the Gazette of Antwerp According to Hendrik Serruys, the cause lies partly in the lower residual value of electric cars. “Leasing companies initially thought that electric cars would have a residual value comparable to that of combustion engines. In reality, the second-hand market for electric commercial vehicles is less attractive. As a result, leasing companies have to pass on these costs in the monthly lease amount. Another option is to extend the lease period from four to five years to reduce the monthly costs.”
mobility budgets
Although inflation has pushed up wages in recent years, mobility budgets often lag behind. “Budgets have increased,” says Serruys, “but not everywhere at the same pace as wages.” Employees who want to renew their lease car are often told that the more expensive models no longer fit within the available budget.
Those who cannot accept the limited choice can consider changing employers. “Suppose you can get that car elsewhere, then you might switch more quickly. But you cannot demand that HR requires you to have a different model,” says Serruys.
The commercial vehicle market continues to move. Where a few years ago large electric SUVs were still the norm, the focus is increasingly shifting to compact and more efficient models. The rise of smaller electric commercial vehicles therefore seems irreversible.
