Dealerships are warning of a looming recruitment and retention crisis following the federal government’s decision to scrap worker automobile ownership schemes (ECOS), a profit widely used across the motor retail sector.
In keeping with recent research by Startline Motor Finance, 45% of dealers imagine the top of ECOS will directly harm their ability to draw and keep staff.
The schemes, which permit dealership employees to drive recent cars at heavily discounted rates without triggering benefit-in-kind tax or National Insurance contributions, have been a key incentive for employees across the industry.
The Treasury announced last 12 months that it will abolish ECOS from April 2026, claiming they were “contrived” and primarily designed to avoid tax.
Nevertheless, the automotive sector says the move risks removing an important perk at a time when dealerships are already facing significant staffing challenges.
“These schemes have helped hundreds of employees afford a brand new automobile while giving dealers a useful pipeline of well-maintained vehicles for resale,” said Paul Burgess, CEO of Startline Motor Finance.
“Removing that profit with out a clear substitute goes to make recruitment even harder for an industry already under pressure.”
The federal government has yet to publish details or hold a consultation on how the change will probably be implemented, despite pledging to achieve this over six months ago.
While some within the industry agree the schemes were problematic – 35% of dealers surveyed said that they had concerns about ECOS even before the Treasury’s announcement – others view the move as a part of a broader pattern of policy decisions making life harder for dealers. These include increases to employer National Insurance and the National Minimum Wage.
Despite the uncertainty, some dealerships are taking proactive steps. Nearly one in 4 dealers (24%) say they’ve already replaced their ECOS with a special staff profit, hoping to take care of their appeal as employers in a competitive market.
The federal government expects the move to spice up tax revenue by £275 million in the primary 12 months after implementation, falling steadily to £175 million by 2029/30.
But industry leaders are questioning whether the financial gain is well worth the risk to workforce stability and the broader health of the automobile retail sector.
“There’s little question that ECOS needed reform, but removing them altogether without providing a viable alternative risks harming the very people the industry relies on most,” said Burgess.
The findings come from the Startline Used Automotive Tracker, a monthly survey produced in partnership with APD Global Research, which gauges sentiment amongst used automobile dealers on market trends and policy developments.
This Article First Appeared At www.am-online.com
