Sal Paradise wrote:You would be better off leasing three year old cars when the bulk of the value of the car is written but - in most cases - the cars are perfectly usable and reliable. Having new cars is an unnecessary luxury.
As usual, you take a simplistic view and reach the wrong conclusion.
There are many factors involved in costing any contract hire agreement and while depreciation is a major factor, what needs to be determined is the sale price from which that depreciation is calculated. The on-road price will be far less than what an individual could expect to pay and becuse the manufacturers have knowledge of how Motability cars are maintained, the residual price will be far higher than would be offered to any individual: the result is a low monthly rental.
But first you need to look at just what Motability does.
Motability does not buy cars and then rent them out, they operate a back-to-back leasing scheme, coupled with a manufacturer-backed warranty and maintenance programme. This offers straight-line accounting, so cost projections are simple with little opportunity for any surprises down the line: a major plus from an accounting point of view.
Of course an individual could pick up a three year old car and run it for the next three years at a lower cost than Motability, providing that everything runs and works to plan. That lower cost would be blown out of the water if there was a failure to a major component: add a blown engine or gearbox and your calculations would be bolloxed. Now multiply that by a nationwide factor and you can see where your "savings" could easily evaporate.
It is for these reasons that Motability operate new vehicles. To depart from the model would leave too many variables for any government accountant to be comfortable with. And before you jump back in, I have previously supplied hundreds of vehicles, large & small on various forms of contract including: cash purchase, HP, simple washout lease, operational lease (with or without maintenance), full contract hire etc. The area of vehicle supply is certainly not alien to me.