UK’s largest fleet owner Motability Operations saw a record-breaking 14.7% increase in customer numbers only to be offset by a pre-tax loss of £564.6 million in 2024, highlighting market volatility due to the transition to electric vehicles (EVs), a correction in used car values and inflationary pressures.
Despite these challenges, Matthew Hamilton-James, chief finance officer of Motability Operations said he remained confident in the business’s financial structure which will in future be demonstrated by the introduction of a new profitability metric to enhance transparency in financial reporting.
The latest results were shaped by several key factors. Customer growth was a standout achievement, with the total fleet surpassing 815,000 vehicles. Improvements in vehicle supply and a 7% increase in eligible recipients of qualifying disability allowances contributed to a record 170,000 new customers joining the Motability Scheme.
However, growth was impacted by several factors.
Rising inflation affected every part of the supply chain, particularly insurance costs, which rose by 46% over two years and Motability Operations said it had absorbed these costs to shield customers from increases in lease prices.
The used car market also saw a sharp correction in late 2023 before stabilising in 2024, with ongoing volatility in EV residual values posing risks.
The company also made substantial investments, including £152.6m in New Vehicle Payments (NVPs) and £57.7m in EV initiatives, amounting to a total of £210.3m in customer support programmes.
The business reported that as cost pressures mounted, lease prices also began to rise, although programmes like NVPs helped cushion the impact for many customers. However, these initiatives are coming to an end, potentially exposing customers to higher advance payments in the future.
Revenue grew by 24.4% to £6.9bn, driven by higher customer numbers and improved vehicle supply. However, financial performance was significantly affected by declining gains on vehicle disposals, which fell to £8.9m from £420.4m in 2023, and reduced depreciation credits, which dropped to £116.1m from £631m the previous year.
Additional challenges included higher operating costs, resulting in an underlying pre-tax loss of £130.3m, and impairments amounting to £348.8m due to accelerated depreciation and rebalancing of residual value assumptions.
Despite these difficulties, the company maintained a strong financial position, with closing capital reserves of £4bn and undrawn credit facilities of £1.5.bn
Looking ahead to 2025, Motability Operations said it was cautiously optimistic with improved new vehicle supply reducing customer lead times and lease extensions. However, inflationary pressures and residual value volatility remain significant concerns.
Hamilton-James said: “In 2024, we continued to navigate a volatile landscape, with new vehicle supply returning to the market, manufacturers increasingly focusing on the transition to EVs, and a correction in used car values. However, our robust financial structure continues to serve us well. We remain confident that the sound underlying economics of our business model, and robust capital headroom position us well as we plan ahead.”
“While the road ahead presents challenges, the strength of our financial model and capital reserves provides the foundation for continued support of our customers. We remain committed to navigating these changes while delivering on our mission.”
