It’s a great time to be in the novated leasing business thanks to the Federal Government policy that has revitalised the industry after supply chain delays impacted the delivery volumes of listed Fleet Management Organisations (FMOs) in recent years.
In the recent half year results announcement, MMS CEO, Robert De Luca said “The Group’s strong financial performance was achieved by supporting our customers with the benefits of novated leasing and salary packaging in maximising their take home salary during a period of increased cost of living and higher interest rates.
Supported by the Federal Government’s Electric Vehicle FBT exemption, we have seen a clear move by Australians to transition to zero emission and more fuel efficient vehicles. Our strong performance was supported by increasing demand and availability of Electric Vehicles reflected in novated lease sales being up 25.7% for the period with electric vehicles now accounting for 36.9% of new leases in the period.”
As the market leader in novated lease and salary packaging, MMS do have the most to gain from the popularity of electric vehicles and the FBT Exemption on novated leasing. There were some hints in the presentation with a statement that novated lease yields were up 14.9% and amount financed up 17.8%.
Overall the announcement was all positive with very little mentioned of falling used car prices (impacting end of lease income), and a decline in lease extensions (another profitable off shoot of supply delays).
The big impact to future earnings is the loss of the South Australian Government Salary Sacrifice Arrangement to Smartsalary as of 1st July 2024. This will reduce novated lease numbers by 5,600 vehicles and salary packages by 38,700.
