Motability states that increased motoring costs have contributed to its £565m profit decline
Disabled motoring fleet owner Motability posted a £564.6 million pre-tax loss for 2024, a decline on the £748m profits it recorded in 2023 despite there being a 14.7 per cent rise in the number of people joining the scheme last year, the firm
The losses came despite the company’s revenue actually jumping by 24.4 per cent, 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, which is currently set at £750.
As reported in THIIS in January 2025, Motability blames increased motoring costs, including insurance, the volatile resale values of EVs, and changes in the car market which mean that advance payments for some vehicles have increased.
Motoring costs have risen in recent years against a backdrop of continued inflation and supply chain pressures. The automotive sector is undergoing significant change as manufacturers invest in producing more electric vehicles, while also managing supply chain issues and the impact of inflation.
Motability says car insurance costs have risen by 46 per cent since 2022, resulting in an additional £700 cost per vehicle over a typical three-year lease.
Motability Operations, which operates the Motability Scheme, acknowledges that its customers are also more likely to make a claim compared to the UK average, which also adds cost to the Scheme.
It also sells 250,000 ex-lease vehicles to the motor trade each year which helps to fund new cars for Scheme customers and it stated that 2024 saw a drop in used car prices.
This downturn is particularly impacting electric vehicles, it states, which are reducing in value at a rapid rate due to slowing consumer demand and a resulting plunge in residual values. This trend creates significant challenges for the automotive industry, including leasing programmes like the Motability Scheme.
In addition, the Motability Scheme’s all-inclusive leasing package is supporting 815,000 people across the UK. This increase has required more investment and borrowing to connect more people to the freedom and independence that the package provides. The interest rates for borrowing additional funds have increased alongside other rates, such as those for mortgages, which also affects the cost of the Scheme.
This means that some advance payments, needed for the more expensive vehicles on the Scheme, have increased, but the payments have not increased by as much as similar leasing packages outside of the Scheme. Some advance payments have decreased and there are over 60 vehicle derivatives with no advance payment.
Despite the losses, Motability remains the biggest single-source supplier of used cars and a key player in the UK’s transition to EVs. Applications for EVs rose in 2024 by 17 per cent, taking EVs’ share of the Motability fleet to nine per cent.
Andrew Miller, Chief Executive of Motability Operations, stated: “Drivers are seeing increased costs across the UK due to rising inflation and the price of energy, and these external factors affect what we can offer to our customers.
“We’re working with car manufacturers and our partners to provide good value to our customers and the Motability Scheme is 45 per cent cheaper on average compared to alternative options.
“We’re committed to ensuring the sustainability of the Scheme during this unprecedented period of change so that we can continue to keep our customers connected now and in the long term.”
