Market Insight: Leasing tells sales story
WHAT Australians choose to buy as their next car is accurately portrayed in the vehicles they pick as part of a salary sacrifice lease program.
These are the vehicles they choose – almost regardless of cost and complete with all the accessories they yearn – knowing they have a tax-effective lease program that is saving them big bucks.
They are, in essence, private purchases of the cars they desire the most at a price that thanks to their business or employee, they can afford.
With the addition of the removal of FBT on EV leases, it comes as no surprise then that EVs are appearing in the Fleet News Group’s annual survey.
Released last month, the survey features an EV for the first time and, again, no surprises that it’s Tesla’s Model 3.
Fleet News Group said that the list of the top-selling novated lease vehicles provides an alternative new cars sales leader board for manufacturers, dealers and fleet managers.
“This annual survey of novated lease top sellers has tracked changes in comsumer preferences and market trends since 2017,” it said.
“The top 10 novated lease vehicles in 2022 highlight the significant shift towards zero emissions vehicles.
“In 2022, a new federal government was elected in Australia and one of its first policy changes was the introduction of the Electric Car Discount Bill, which made EVs and PHEVs exempt from fringe benefits tax (FBT).
“The FBT exemption includes novated leases and has made electric vehicles more attractive than ever to salary package.”
The top-10 for 2022 was headed by the Ford Ranger which has held that position for the past three years, although it has always been in the short list since Fleet News Group first published it in 2017.
Not making an appearance in 2022 is the Toyota LandCruiser and Toyota HiLux. It is the first time both have failed to make the list in the six years of the survey.
The Hyundai i30 has been strongly featured for the past two surveys and aside from the Tesla Model 3 inclusion in 2022, is the only passenger car featured.
Previous cars that scored well were the Volkswagen Golf and Toyota Corolla but neither have featured for the past three years.
Taking the place of the cars is the SUVs, with the Mazda CX-5 the most popular followed by the Toyota RAV4, Hyundai Tucson and Mitsubishi Outlander.
In commenting on the results, Novated Lease Australia founder and CEO Shaun McGowan, who contributed to the survey, said there had been major changes in consumer preferences.
“We’ve seen a huge surge in interest in EVs coinciding with the introduction of the FBT exemption on eligible low and zero emission vehicles late last year,” said Mr McGowan.
“This has completely changed the calculation for car buyers as the traditional price premium for EVs was wiped out overnight.
“With a novated lease, you can now buy and run a higher-end EV, like a Tesla Model 3, for less than a middle-of-the-road non-EV.”
Mr McGowan said that the majority of people he deals with “now want to talk about EVs.”
“We’re also seeing employers becoming much more open to novated leasing as the FBT barrier has been lowered significantly.”
But the trends remain tempered by vehicle supply issues. Fleetcare’s general manager of novated, Tony Ghosn, said supply was still a challenge in 2022 for popular novated models.
“Novated leasing trends in 2022 were impacted by two main factors – vehicle supply issues and increased inquiries for EVs in the second half of the year following the government’s FBT exemption ruling,” said Mr Ghosn.
“Novated vehicle selection predominantly continued to follow general purchasing trends with dual-cab utes and SUVs being most popular with drivers.
“The last quarter of the year however has seen EVs, particularly Tesla models, rise to challenge the top selling models.
“With FBT exemptions in place for EVs and PHEVs, and more models becoming available and affordable, we expect this trend to continue in 2023.”
While Tesla occupies a premium position on the novated lease chart and also as the most desired EV, others are gaining sales traction.
“This year, other EVs joining the party include three lower-priced models, the MG4, BYD Dolphin and GWM Ora.
Fleet News Group reported that Inside Edge Novated Leasing’s director of sales and marketing, Andrew Kerr, noted a move away from traditional vehicle choice to EVs.
“The shift has been away from large dual-cab utes to EVs. This is not only reflected in cars actually delivered but in the enquiry level which results are somewhat delayed due to extended delivery times,” Mr Kerr told Fleet News Group.
He also noted an increase in novated leases inquiries based around the FBT exemption, lease benefits and EVs.
“We see this trend continuing and the focus moving towards any manufacturer launching EVs and plug-in hybrids (PHEVs) over the next 12 months.”
Summit Fleet Leasing and Management national novated manager Philip Owen said there had been a dominance of lifestyle vehicles as buyers look for a vehicle for work and play.
“The preference overall within novated has been for ‘lifestyle’ focused vehicles which has resulted in Ford Ranger taking out top spot with novated clients,” said Mr Owen.
“The 4WD and SUV novated choice of vehicles has again been driven through employees preferring options that enable the working week commuting and family friendly holidays, weekend activities to be catered for with a flexible vehicle choice.
“We have found the majority of these choices are across the Japanese and Korean manufacturers which includes Hyundai, Toyota, Kia, Mitsubishi as primary makes and models of choice for novated leases.”
Simplygreen Salary Packaging CEO Bobby Karanfilov said his company was expecting BEV and PHEV to hold a number of top 10 positions in 2023 because of the EV exemption.
“We’ve already seen our lease enquiry volume for FBT exempt models jump by over 30 per cent in the first two months of the year and this will continue to grow as more models hit our shores under the luxury car tax threshold (LCT) which is $84,916,” he said.
Fleet News Group’s leasing guide for 2023 is available here.