The UK’s biggest fleet, whose “explosive” growth in June last year was credited with helping car makers through a tricky period, has reported losses of more than half a billion pounds – saying this highlights the growing cost of car ownership and volatile resale values of EVs.
Motability Operations, the company behind the Motability charity, buys cars and leases them to people with a qualifying disability allowance for £75.75 per week. The package includes road tax, servicing, insurance, breakdown cover, and tyre and windscreen repair. It has become a major player in the UK car market since its 1977 foundation and now has a fleet of 815,000 cars.
Despite a 15% rise in the number of people joining the scheme last year, the firm posted a £564.6 million pre-tax loss for 2024, a huge drop from the £748m profits it recorded in 2023.
The company, which is owned by four major banks including Barclays and HSBC, blamed rises in the cost of servicing, insurance and new cars, including EVs. It says insurance, for instance, has risen by 46% since 2022, resulting in an additional £700 cost per vehicle over a typical three-year lease.
A further contributing factor was what it called the “reduced value” of the 250,000 ex-lease vehicles it sells to the motor trade each year. Vehicles in the best condition go through its direct disposals business and the rest are put through third-party auctions.
Even more damning is that the losses came despite the company’s revenue actually jumping by 24.4%, from £5.5 billion in 2023 to £6.9bn last year.
As a result, the firm said the increases in its costs will result in new customers paying higher advance lease payments. Currently, this is set at £750.
CEO Andrew Miller said: “With the level of change in the market – driven by rising inflation, higher energy costs and the transition to EVs – drivers across the UK are seeing increasing costs and we are not immune to this.
“Until now, we have been able to protect customers from rising prices, using the profits earned in the immediate post-Covid period. Our investments will now come to an end and customers will see rising advance [lease] payments.”
Despite the losses, Motability looks set to remain a major force in the new and used car markets – it is the biggest single-source supplier of used cars – and, crucially, a key player in the UK’s transition to EVs.
