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PCH soaring in popularity

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PCH is fuelling leasing broker growth

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21 November 2016

The figures showing PCH popularity

  • Market trend cars +11%
  • 39% of new contracts are contract hire.
  • Contract hire represents 50% of cars on fleet.
  • PCH has continued to grow. 41% of new contracts in H1 2016 were PCH.
  • PCH represents 43% of cars on fleet.
  • PCH volumes exceed those of contract hire.
  • Rapid market growth means contract hire and finance lease volumes are still growing

PERSONAL contract hire is taking off as the way to get a new vehicle with PCH – that’s the abbreviation of personal contract hire – soaring in popularity for both cars and vans.

PCH is often described as business contract hire with the VAT on – which is a useful way to think about it.

There’s good reason for the PCH boom: there have been some great offers on cars that many micro and small businesses can take advantage of swiftly.

It also saves small businesses much admin hassle – there’s no accounting for the company car tax or the National Insurance on employee-provided company cars, although businesses should still make sure they meet their duty of care considerations and ensure the lease cars are correctly insured for business use.

And for sole traders, PCH makes excellent sense – the business use proportion of the rental can be set against tax, making it tax efficient.

As the leasing broker market expanded 11% in the first half of 2016, 41% of the H1 growth was attributed to PCH deals, up from 39% at the end of last year, according to latest BVRLA data.

In fact, PCH volumes exceeded business contract hire volumes which remained static.

Meanwhile the volume of commercial vehicle leases increased by 13% to 67,239 units, with contract hire growing in this sector at the expense of other forms of van finance.

Leasing Broker Federation member Keith Hawes of PCH specialists Nationwide Vehicle Contracts said: “At Nationwide Vehicle Contracts we continue to experience year-on-year growth in both business contract hire and personal leasing.

“If you consider the benefits of these products it is not surprising that increasing awareness, through referrals and existing customers opting for new agreements, is helping to grow this channel to market.

“Many people see PCH as a means of acquiring a brand new vehicle quickly with little relative initial outlay and at a budget to suit their needs.

How does personal contract hire work?

“They do not have the worry of disposal, they can capitalise their existing owned vehicle, the new car or van is invariably covered by manufacturer’s warranty and if they opt to take a full service package they have peace of mind for the duration of the contract.

“The younger generation especially are now conditioned to ‘rent’ so why not their car?

“Funders continue to positively support personal leasing products and whilst along the way we may see adjustments to residuals and rentals in our opinion the market for this method of acquiring and running vehicles will continue to grow.”

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