Fleet roll-out of salary sacrifice schemes is being hamstrung by a range of factors at present, “badly affecting” their success, the Association of Fleet Professionals (AFP) has reported.

Dramatic increases in lease rates for EVs have proved a key problem

While employees are keen in theory to join such schemes, issues such as highly restricted electric vehicle supply, rising lease costs and the state of the wider economy mean many ventures are failing to fulfil their potential, the AFP has warned.

A lack of engagement by some providers is also proving problematic and AFP chair Paul Hollick said the association was picking up a general sense of disappointment from its members around salary sacrifice.

“This isn’t to say that there aren’t successful salsac schemes out there but there seems to be a widespread agreement that many just haven’t taken off in the manner that employers had hoped thanks to a whole series of problems.”

Dramatic increases in lease rates for EVs – by far the most popular vehicles on such schemes due to the current low company car tax rates – have proved a key problem and are seriously affecting the basic attractiveness of salsac for employees.

But Hollick said affordability was also being affected by wider economic conditions and pressure on employee’s personal finances.

“There’s a potential question emerging about whether businesses should even be promoting salsac at a time when some people may be struggling to meet their heating bill or their mortgage payment,” he outlined.

Finally, the AFP has warned about less effective approaches to salsac roll-out by some providers.

“While there are good salsac companies out there, of course, others are proving to be less effective. From member feedback, this appears to be especially the case where providers have promised to put a scheme in place with almost no assistance from within the host company’s fleet, HR and procurement departments.

“In our experience, to make salsac work, there needs to be a proactive partnership between the provider and the employer.”

While the core idea of salsac remains attractive, Hollick said it was difficult to see take-up among employees improving markedly until these issues were resolved.

“Just a few months ago, many fleets were hoping that that their salsac scheme would be an effective doorway to help those on middle and even lower salaries get into a new EV – especially if those people were part of the grey fleet – but the numbers are just not currently adding up. This is often the case even when manufacturers offer significant levels of support.

“None of this is to undermine the concept of salsac. It remains an idea with huge attractiveness for fleets but issues such as poor EV supply, rising lease rates, the general state of the economy and individual service issues are genuine problems and it is difficult to see salsac fulfilling its considerable potential across the fleet sector until these improve.”

Last week saw salsac specialist Tusker report huge success for its own schemes. It’s launched more than 300 customer salary sacrifice schemes so far in 2022 and says it’s seen a big rise in companies prioritising reduction of their carbon output has become more of a priority and turning to its car benefit schemes. New customers include Anglian Water, which has reported high levels of employee engagement.

The BVRLA, amongst others, has spoken out on the need for continued low Benefit-in-Kind rates to underpin salary sacrifice schemes. It’s encouraging members to support its ongoing #SeeTheBenefit campaign, which seeks to secure greater clarity on EV company car tax rates and see the rates kept low for longer.

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