July 27, 2026 - UK Company Car Lessors Look For Stable Regs

This is the Telemetry Transportation Daily for July 27, 2026, and I'm Sam Abuelsamid, Vice President of Market Research for Telemetry. 

The way automotive markets operate in countries around the world varies quite a bit, based at least in part on differences in regulations. In Japan, more than half the market is comprised of so-called kei cars, a segment of small cars that are strictly limited in size and performance. The U.S., with its comparatively low fuel prices and vast distances between cities, is partial to much larger and more powerful vehicles. In the UK, somewhere between 60 and 64% of drivers of new vehicles have them provided by their employers. These are either company cars or provided under a so-called salary sacrifice plan that allows employees to take a reduced cash income in return for non-cash benefits like a car, which in turn also saves them money on income taxes. 

Drivers do have to pay a benefit-in-kind tax generally based on a formula that combines the value of the vehicle and its CO2 emissions. The lower the CO2 emissions, which are 0 g/km for an EV, the less tax paid, which is currently 4% for EVs compared to 25% for the most efficient non-plug-in vehicles. 

As a result of those tax benefits, 75% of eligible drivers are now choosing plug-in hybrids or battery electric vehicles, with EVs accounting for two-thirds of the total. However, as in the U.S., EVs have higher depreciation than combustion vehicles, and since these company-provided cars are leased, they have to go into the second-hand market after three years. The British Vehicle Rental and Leasing Association is concerned about those losses, as well as potential changes to the UK's zero-emission targets and new pay-per-mile taxes on EVs to offset the lost upfront tax revenue. One solution lessors are looking at is leasing plans for second-hand EVs, along with stable regulatory policies from the government, in order to keep the values of these vehicles up and limit their losses without having to raise the monthly payments. 

Thanks for listening.