According to a new report from the British Vehicle Rental and Leasing Association (BVRLA), the impact of the vehicle rental and leasing sector on the UK economy was around £25bn in 2013, including £5.2bn in tax revenue.
The report, which was commissioned by the BVRLA from research foundation Oxford economics, measures three types of economic impact:
- Direct: the activity of the rental and leasing companies themselves;
- Indirect: the activity of their UK-based suppliers;
- Induced: economic activity generated by the payment of wages to staff employed by the rental and leasing industry.
The scale of the rental and leasing industry in the UK becomes clear when you consider that in 2013, BVRLA members had 3 million vehicles on lease and 400,000 vehicles available for rental.
The main areas of direct and indirect economic activity are the businesses involved in the industry itself, manufacturers of UK-made vehicles and engines, the used car and van market, and the activity of the UK automotive dealers which supply rental companies.
It’s a people business
The report estimates that the rental and leasing industry itself employs 53,600 people directly and 263,400 indirectly, through the wider supply chain and through consumer spending.
If accurate, this claim is quite impressive, as it means that the rental and leasing industry accounts for the employment of 1 in every 88 workers in the UK!
A sizeable part of the industry’s contribution to the economy comes via its purchase of British-built vehicles, along with foreign vehicles with British-built engines. Rental and leasing companies are amongst the biggest buyers of new vehicles each year, and purchased an estimated 308,000 UK-made vehicles in 2013, which is thought to have generated £4.3bn in GDP and £1.4bn in tax revenue, as well as 90,000 jobs.
Overall, the industry purchased 80% of the British-made vehicles that were sold in the UK last year, and 20% of all British-built vehicles, including vehicles made for export.
Who needs vehicle rental and leasing?
A great many people, it seems: one of the reasons the leasing and rental industry has such a big impact on the UK economiy is that so many other businesses are dependent on its services. As a result, the sector’s gross value added (the sector’s contribution to the UK’s GDP) of £13.3bn was comparable to that of the electricty generation and distribution indsutry in 2013, which had a gross value added of around £18bn.
This kind of illustrates my point — virtually 100% of UK businesses require electricity, so the electricty generation and distribution sector is going to have a big impact on GDP, rather like the leasing and rental sector.
Putting it in perspective
However, before we get too carried away, it’s worth rembering that even the BVRLA’s £25bn headline figure is just a drop in the ocean in the scheme of things, and accounted for just 1.6% of UK GDP in 2013, when UK GDP totalled £1,606bn!