The Economic Shift
Fleets are increasingly moving away from traditional two-to-three-year replacement cycles. Our latest analysis at DAVIS reveals that four-to-five-year intervals are becoming the new norm, driven by a convergence of economic, operational, and risk-management forces.
Rising costs, including National Insurance, employee expenses, and fuel prices have pushed businesses to seek predictable, lower cash-flow commitments.
In a high-interest environment, spreading the cost of a vehicle over a longer period is a logical financial move.
The Role of Electrification
The switch to EVs is a major factor. As residual values (RVs) remain volatile, longer contracts help leasing companies smooth out risk. For businesses, this makes EVs significantly more affordable monthly, supporting wider adoption without the need for massive upfront capital.
The “Health Warning”: Managing Older Fleets
While the rental savings are clear, they come with a caveat. Years four and five typically see rising maintenance costs and the expiration of manufacturer warranties.
Licence Check Managing Director, Keith Allen, warns:
