• 45% say the government’s ending of employee car ownership (ECO) schemes last month will hit staff attraction and retention
• However, 35% believe that ECO schemes were always legally questionable
• Also, 24% have already replaced their ECO schemes with other staff benefits, reports the new Startline Used Car Tracker

May’s Startline Used Car Tracker also finds that 38% think the schemes are an important benefit for dealer staff while 41% believe “a lot” of current government actions are negatively affecting car dealers.

Paul Burgess, CEO at Startline Motor Finance, said: “Attracting and keeping good quality staff remains an issue for many dealerships and the ending of ECO schemes by the Chancellor planned for next year is clearly felt to remove a key element of employee benefits packages.

“What is perhaps noteworthy is that a large number of dealers – more than four out of 10 – also feel that this is part of a pattern from the government, that they are just generally making life quite difficult for dealers.

“Perhaps everything from higher employee national insurance to substantially increased levels of minimum wage can be placed under this heading although, on the other side of the balance sheet, we now have sensible revisions to the Zero Emissions Vehicle Mandate.”

ECO schemes enable dealer employees to buy new cars at highly discounted prices on short term leases with low repayments while attracting no benefit-in-kind or National Insurance payments. At the end of each cycle, many vehicles go directly into dealer stock.

However, at the October Budget, the government announced plans to end these arrangements by April 2026, calling them a “contrived” method of avoiding benefit in kind taxation, despite objections from the Society of Motor Manufacturers and Traders.

Perhaps surprisingly, Startline’s Used Car Tracker showed that 35% of dealers agreed with the government’s assessment, saying ECO schemes were always questionable, while 24% have already replaced them with another option for staff.

Paul said: “This finding suggests that around a third of dealers feel ECO schemes are fundamentally problematic and it was perhaps only a matter of time before action to end them was taken by the Treasury.

“However, it’s positive to see that a quarter of dealers have already looked to replace their ECO scheme with a new form of car provision for staff, and these will hopefully help to resolve any employee attraction and retention problems that are arising.”

The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This time, 308 consumers and 66 dealers were questioned.