Nearly a third (29%) of UK companies expect their vehicle fleet to grow over the next three years, according to latest Arval research.

Reasons for the predicted fleet growth include business expansion or new activities, employee attraction and retention, salary sacrifice arrangements and car sharing

Its 2023 Mobility Observatory Barometer found that company expansion was the overwhelming reason for decision-makers predicting fleet growth (mentioned by 76%) but human resource-related needs (28%) and plans to offer vehicles to employees under salary sacrifice schemes (25%) also factored highly.

In contrast, just 5% of those surveyed predicted that fleet sizes will fall, which is less than in the 2022 research.

Shaun Sadlier, head of Arval Mobility Observatory in the UK, said the plans for fleet growth were significant and showed the continued attractiveness of the company car as a benefit.

“Considering all that the fleet sector has had to handle in recent years – from the pandemic to production shortages – this underlines its resilience and core position in business transport.”

The research also shows greater optimism among smaller companies – 26% of those with fewer than 10 employees expect an increase in their fleet size compared to 16% in organisations with more than 1,000 employees.

The findings are also notable when set against the research’s international findings – the UK’s growth forecast of 29% of companies was higher than both the European average of 23% and the global average of 27%.

Sadlier also noted that a growing number of reasons behind planned fleet growth rates.

“Looking at specific reasons why UK fleets expect to see growth – such as expanding or planning new activities, employee attraction and retention, salary sacrifice arrangements and car sharing – it is clear that predictions of higher fleet numbers are being prompted by an ever-wider range of factors.

“Also, although it is not explicitly stated as a reason, the continued favourable tax benefits on electric vehicles is almost certainly a strong underlying reason, fuelling these increases through company car and salary sacrifice arrangements.”

Latest HMRC data reveals the continued appeal of company cars amid the shift to electric vehicles. The recently published Benefit-in-Kind statistics reveal that 720,000 UK employees paid company car tax in 2021/22 – that’s the same level as in the previous year and follows years of steady decline. Back in 2015/16, there were 960,000 drivers paying company car tax but rising tax thresholds and the diesel surcharge led to many drivers opting out and running their own private cars. The introduction of more attractive tax ratings for low-emission cars, spearheaded in April 2020 by the 0% Benefit-in-Kind rate for fully electric cars, has helped turn the tide on this.

For more details of the Arval Mobility Observatory and the 2023 Barometer findings, please click here.