Electric vehicles entice cash takers back to company schemes, says BMW – FleetNews

An increasing number of businesses and company car drivers are bypassing plug-in hybrid vehicles and instead opting to make a straight switch from diesel to full battery electric cars.

That’s the view of BMW general manager corporate sales Rob East (pictured above), and it’s supported by the official registrations figures which saw battery electric vehicles (BEV) pull away from plug-in hybrids (PHEV) last year. BEVs grew by 186% to more than 108,000, with PHEVs finishing on just under 67,000. A year earlier, they were almost neck-and-neck (BEV: almost 38,000; PHEV: almost 35,000).

“We are seeing a new dynamic with a shift straight to pure EVs – it’s speeding up,” East said. “It’s party down to changes in working patterns with less travel but also the plethora of new electric models coming to market.”

Companies, which had put policies on hold last year, are returning to the market, with order rates comparable to pre-Covid levels. And they are bullish about their future fleet sizes, according to BMW surveys.

“We are seeing an appetite for more people to return to the company car – 72% predict their fleet sizes will increase over the next three years as people opt back in,” East said. “It is definitely not the death knell for the company car; there is a compelling reason to take an electric vehicle or PHEV and we are seeing people opt back in after two or three cycles of taking cash.”

The Covid crisis, he added, has been a “catalyst for change” for manufacturers, enabling them to reflect upon and reassess their market strategies.

“When you look at the overall UK automotive market - not just us and not just premium, it’s across the board – there’s been a mismatch on sales ambition versus demand,” he said. “We start to see new car profit falling and then brands ultimately become dependent on short cycle like rental. That leads onto over-supply of the young used market with residual values falling and it creates this cycle.

“We want to take a different approach; we want to go from a supply-led model to demand-led, particularly with our new products. Our sales plan this year is all about growing our retail, our SME and our corporate share, while actively reducing that short cycle business and our internal volume.”

Last year, BMW registered 8,298 cars in the rental market, a reduction of 51.5% on 2019, with Mini at 1,387, down 62% – both in a sector that dropped 50% across all brands.

“That’s not because there hasn’t been rental demand; it’s an active decision that we’ve tried to control rental volume,” East said. “For us, this is probably a once in a decade shift.”

He claimed BMW was already seeing positive benefits. The 320d M Sport, traditionally sitting at the heart of the company car market, saw RVs rise 7% from September 2019 to September 2020, while Mini Cooper RVs increased by 8%.

While not willing to share rental reduction targets for 2021, aside to say it would be “a continuation of that trajectory”, East said his colleagues at the German carmaker’s Munich head office were “very supportive” of the plans. BMW had a “clear route map” supporting by a plethora of new electric product due to for launch in 2021.

BMW is also working on its used car proposition via the retail network, moving the emphasis to slightly older used cars, as well as supporting them to boost penetration into the “more challenging” SME sector by offering salary assistance for local business development managers, plus coaching and training.

The leasing sector has been kept informed about the new strategic direction via a leasing directors’ forum. “They were very positive,” East added.

Meanwhile, BMW Inside Edge, a rewards platform for company car drivers, is now live and supports the overarching strategy of increasing and improving the customer experience.

BMW will launch 25 electric vehicles by the end of 2023, of which half will be fully electric. Pure EV is expected to account for 15-25% of its global sales by 2025; in the UK that could reach a third, rising to half by 2030.

“Speed of transition will increase based on changes in usage profile, fiscal benefits, leasing company awareness of batter technology, and the expansion of the charging infrastructure,” East said.

“EVs were a marginal choice; now they are a prudent, pragmatic choice for company car drivers.”

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