Dealerships are warning of a looming recruitment and retention disaster following the federal government’s choice to scrap worker automobile possession schemes (ECOS), a profit extensively used throughout the motor retail sector.
In response to new analysis by Startline Motor Finance, 45% of sellers imagine the tip of ECOS will straight hurt their capacity to draw and preserve employees.
The schemes, which permit dealership workers to drive new automobiles at closely discounted charges with out triggering benefit-in-kind tax or Nationwide Insurance coverage contributions, have been a key incentive for employees throughout the business.
The Treasury introduced final yr that it might abolish ECOS from April 2026, claiming they have been “contrived” and primarily designed to keep away from tax.
Nevertheless, the automotive sector says the transfer dangers eradicating an important perk at a time when dealerships are already going through important staffing challenges.
“These schemes have helped hundreds of workers afford a brand new automobile whereas giving sellers a helpful pipeline of well-maintained automobiles for resale,” stated Paul Burgess, CEO of Startline Motor Finance.
“Eradicating that profit with out a clear substitute goes to make recruitment even tougher for an business already below strain.”
The federal government has but to publish particulars or maintain a session on how the change might be applied, regardless of pledging to take action over six months in the past.
Whereas some within the business agree the schemes have been problematic – 35% of sellers surveyed stated that they had considerations about ECOS even earlier than the Treasury’s announcement – others view the transfer as a part of a broader sample of coverage choices making life harder for sellers. These embrace will increase to employer Nationwide Insurance coverage and the Nationwide Minimal Wage.
Regardless of the uncertainty, some dealerships are taking proactive steps. Almost one in 4 sellers (24%) say they’ve already changed their ECOS with a special employees profit, hoping to take care of their attraction as employers in a aggressive market.
The federal government expects the transfer to spice up tax income by £275 million within the first yr after implementation, falling progressively to £175 million by 2029/30.
However business leaders are questioning whether or not the monetary acquire is definitely worth the threat to workforce stability and the broader well being of the automobile retail sector.
“There’s little doubt that ECOS wanted reform, however eradicating them altogether with out offering a viable different dangers harming the very folks the business depends on most,” stated Burgess.
The findings come from the Startline Used Automotive Tracker, a month-to-month survey produced in partnership with APD World Analysis, which gauges sentiment amongst used automobile sellers on market traits and coverage developments.
