Yesterday the SIQ share price took off. Not because of its recent falls because the shareprice of a competito fell, FleetPartners (ASX: FPR). You may think I am crackers for saying this but I am not.
Fleet Partners is doing well with new novated leases for EV's due to )(1)positive government policy on no FBT and (2) the general uptake of EV's as ordinary folk play their part in decarbonising the world.
However the growth of EV novated leases in FleetPartners is being held back because corporate fleets are lagging the trend as there is essentially no suitable EV ute and ute's are a huge part of commercial fleets these days.
This is where SIQ steals the show. The vast, vast majority of Smart Group's novated leases are for individuals who work in the government, not for profit and charity sectors. These are generally people that need a car rather than a ute and can charge the car at home whereas infrastructure for charging fleets of utes is not readily available for all employers.
This means SIQ has a significant inbuilt advantage over its listed competitors when looking at its potential customer base. And on my reckoning less than 1/3 of employees whose organisations have a novated lease deal with SmartGroup actually take out a novated lease.
In this day and age of a 'cost of living crisis' I am certain employers will be encouraging as many staff as p[ossible to get onto the nbenefits of salary packaing and in particular the benefoits of novating a EV car lease.
See report below on FleetPartners
************************************************************************************** Incentives power electric vehicle leasing
Greater investment in charging infrastructure is needed to encourage EV uptake across corporate fleets. Picture: David Clark
Government incentives are fuelling a boom in novated leasing for electric vehicles, according to ASX-listed provider FleetPartners, but broader EV uptake across corporate fleets remains held back by lagging investment in charging infrastructure and the stalled entry of a viable electric ute in the Australian market.
New business writings (NBW) in the company’s novated leasing business increased by 81 per cent in the six months to March, on the back of a surge in EVs purchased through salary packaging.
EVs represented more than half (51 per cent) of the company’s NBW in novated leasing in the first half, with that number reaching 61 per cent for the month of March.
FleetPartners chief executive Damien Berrell said the rise had been fuelled by the federal government’s electric car discount, which provides fringe benefit exemptions for eligible EV purchases. “On the novated side of things it’s obviously the tax break … which makes novating an EV so compelling,” he said.
“That policy came in July last year, and since then we’ve seen huge demand in novated, which you can see through our numbers – the word of mouth has certainly spread across the general employee base.
“Sixty one per cent of the novated leases we did in March were EVs, so the growth we’re getting is this huge tailwind from the demand for EVs at the moment.”
Despite the higher take-up of EVs from employees, Mr Berrell said the transition of corporate fleets remained low, with several barriers to broader adoption.
“Probably the biggest barrier at the moment is fit for purpose – and what we mean by that is utes,” he said. “Half of our portfolio, so half of the customers’ fleets are typically utes, and at the moment there is no viable plug-in or battery ute in the market.
“In terms of employee acceptance, or range anxiety, that’s starting to wane – as novated becomes more popular people are becoming more familiar with them.
“But then there’s charging strategy. About 40 per cent of our customer employees live in apartments, in Sydney and Melbourne, and the vast majority of those apartments probably don’t have an EV charger.
“So it just makes it a little bit more tricky getting employees who are driving EVs to go and charge their vehicles.”
Ahead of Tuesday’s federal budget, Mr Berrell said federal funding to help retrofit older apartment buildings with charging infrastructure would help to fast-track the transition of corporate fleets in Australia.
In its first-half results announcement on Monday, FleetPartners reported that its assets under management or financed (AUMOF) had grown by 10 per cent to $2.1bn, with NBW across its fleet management and novated leasing businesses up 39 per cent to $448m. The result was supported by a continuing improvement in the supply of new vehicles, which the company said was nearing pre-Covid levels.
Net profit after tax, excluding amortisation, came in at $41.8m, down 4 per cent from the previous corresponding period, due to a 6 per cent increase in operating expenses, including higher wages and technology costs.
While arrears were only slightly higher in the first half, Mr Berrell said the challenges facing the Australian economy were playing out across the broader automotive sector.
“When we look at used car prices, they do seem to be staying more elevated and for longer than what we thought,” he said. “Passenger (vehicle prices) have actually turned and are starting to go back up – it’s almost back to the peak of 2022. And so what’s driving that is the substitution effect. When the economy starts to slow down, people start to swing out of new cars and they swing into used cars.”
FleetPartners shares closed 5.7 per cent lower at $3.45. GIUSEPPE TAURIELLO
BUSINESS REPORTER
SIQ Price at posting:
$8.44 Sentiment: Buy Disclosure: Held
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