SMEs lumbered with excessive vehicle maintenance costs

SMEs are falling foul of costs associated with the running of older vehicles, and may be exposed to unnecessary expense as well as duty of care implications as many allow employees to use their own vehicle for business and then claim back mileage costs.

This is according to company Arval UK, which found that, while the majority (73%) own fewer than three company vehicles, about one in four smaller business has over four vehicles, typically a mix of vans and passenger cars.

Unlike larger companies, which often lease vehicles on two to three year contracts, over two thirds of SMEs are buying vehicles outright. The length of time which vehicles are kept has been steadily increasing, and is now almost four and a half years for cars and just over five and a quarter years for vans. Almost half (48%) of all vehicles purchased by SMEs are second hand.

Around one quarter of SMEs allow employees to use their own vehicle for business, the main reasons being because directors feel it is more economic (63%), or because they lack financing (26%) or time (23%) to provide company vehicles.

Commenting on the findings, Elliott Woodhead, Arval UK Director of SME & Partnerships, said, “Our research shows many SMEs may be losing out by not shopping around and looking at how leasing can spread the cost of ownership and provide access to a much bigger range of cleaner more efficient new vehicles.

“SMEs are unnecessarily running older, often second hand vehicles which they buy either with loans or much needed cash. Because they do not generally have access to the resources of a professional leasing company, SME’s may not be aware of the wide range of vehicles and low cost finance options available to them.”