THE UNIQUE APPEAL OF ECOS IN AUTOMOTIVE
For decades, automotive businesses have used ECOS to provide employees with cars in a way that benefits both sides:
Affordable Ownership: Employees can own a car from day one, purchasing it at a significant discount to its list price using trade-level discounts. This is facilitated through an unsecured loan, structured through a credit sale agreement.
Minimal Depreciation Impact: Cars are owned for a short period, typically 6-9 months. At the end of this period, dealerships buy back the vehicles at market value, selling them to customers as nearly new. This ensures employees avoid the financial burden of depreciation and maintenance costs.
Low Cost, High Value: Employees enjoy the prestige of driving high-value cars without the high tax cost associated with driving that vehicle as a company car. Meanwhile, dealerships achieve sales targets and enhance stock rotation.
Flexibility: Agreements are often designed to provide for variable contract lengths and mileage limits offering convenience to employees and the dealerships.
This “ownership” model has proven to be a win-win, allowing manufacturers and dealerships to meet sales targets while delivering significant cost savings to employees. HMRC has never really “liked” ECOS arrangements given that the main purpose is to avoid cars being taxed as company cars, so perhaps not the greatest surprise that they are looking to legislate to stop “contrived” arrangements from April 2026.