The UK car market is showing signs of recovery – but dealers are still navigating a tough road.
New car registrations saw a welcome boost in March, marking the industry’s best performance since the pandemic, according to the latest data from the Society of Motor Manufacturers and Traders (SMMT). But behind the headline numbers, pressure is mounting.
With inflation outpacing wages and household budgets stretched, many buyers are putting big-ticket purchases on hold. 62% of consumers said they spent less on non-essentials in 2024 – and fewer than half felt confident they could afford their next car, according to AutoTrader.
It’s not just about volume either. Dealers are seeing a clear shift in behaviour: 70% say customers are opting for cheaper vehicles, and 65% are trimming back on specs and extras. That’s a direct hit on high-margin sales.
On top of that, vehicle prices have climbed sharply over the past decade – up 67%, from £27,035 to £45,218 on average. It’s a challenging mix.
The Electric Shift Is Still Gaining Ground
Despite financial pressures, the shift to electric is accelerating. Battery Electric Vehicle (BEV) sales jumped 43% in March compared to the previous year, and nearly 29% of all new car registrations were either BEVs or Plug-in Hybrids (PHEVs).
That’s good news. But EVs still come with a higher upfront cost, and that price premium can feel out of reach for many buyers – especially in uncertain times.
For Dealers, It’s a No-Brainer
Here’s where salary sacrifice comes in, and why it’s such a powerful opportunity for dealerships.
Salary sacrifice allows employees to lease a car through their employer using their pre-tax salary. It’s a tax-efficient benefit that can reduce National Insurance contributions and take-home tax, while also unlocking massive savings on a premium EV – up to 60% in some cases compared to private leasing.
The only “catch”? Employees do pay Benefit-in-Kind (BIK) tax, based on the car’s P11D value and emissions. But thanks to low BIK rates on EVs, the savings usually far outweigh the cost.
For dealers, salary sacrifice opens a new path to sales, especially on higher-value vehicles that might otherwise be out of reach for buyers.
A Smarter Route - Salary Sacrifice
In a tough market, salary sacrifice gives dealers a fresh way to sell. It reduces cost barriers, expands your customer base, and supports the EV transition – all while boosting high-value sales.
At EZOO, we’re here to help dealers tap into this opportunity. Whether you want to integrate salary sacrifice into your offering, co-brand a solution, or just understand how it works, we’re ready to support you.
Want to unlock a new sales stream and help your customers save? Get in touch with the team.