With consumer preferences leaning towards leasing rather than owning a car, Skoda is spruiking its own competitive finance offering, as well as the benefits of novated leasing for its electric SUVs.
Buying a car in 2025 is as easy as getting a new mobile phone, according to Skoda.
At the recent launches of the Skoda Elroq and Enyaq electric vehicles, the Czech car maker has emphasised the strength and ease of using its finance offering, as well as the benefits that can be had from novated leasing.
Alongside alternatives such as car subscription, the growth in finance and novated leasing follows the trend of consumer preferences shifting away from outright ownership, and brands like Skoda are hopping on the bandwagon by offering competitive and convenient solutions.
“The Elroq is now $50,000 to purchase, but I don't know how many people would have $50,000 cash just sitting around,” Skoda Australia’s Head of Marketing and Product, Kieran Merrigan, told Drive.
“Most people buying a car are financing in some way, whether it's a bank loan, car finance, against their mortgage, or even the bank of mum and dad. I think it's an important part of the purchase journey.”
Skoda has had its own finance arm, Skoda Choice, in Australia since 2015, and offers a 7.99 per cent comparison rate on loans, as well as guaranteed future value (GFV), which allows customers to decide at the end of the term whether they want to trade in the vehicle, keep it, or give it back.
It said buying a car through one of its dealerships is similar to walking into a JB Hi-Fi or Telstra shop to swap your old phone for the latest model. Many people don’t pay for it outright; instead, they set up weekly or monthly plans, with or without a deposit.
However, the focus on novated leasing, where your employer pays your car lease (with or without running costs) directly from your pre-tax salary, thereby lowering your taxable income, has primarily arisen due to its popularity as a means of purchasing an electric vehicle.
In 2024, EVs accounted for roughly half of all new novated leases, as they are currently exempt from fringe benefits tax (FBT). While the exemption for plug-in hybrid vehicles having ended on March 31 this year, the discount for fully-electric cars is set to continue until 2027.
Novated leases for EVs are most popular in the outer suburbs of Melbourne, Sydney, and Brisbane.
“With cost-of-living pressures continuing to rise, working Australians are increasingly recognising the vital role that salary packaging and novated leasing services can have in helping to ease their financial strain,” said Rohan Martin, Chief Executive of the National Automotive Leasing and Salary Packaging Association (NALSPA), in a recent statement.
“I think that the novated leasing space is more important for electric cars for sure,” said Merrigan.
“The beauty of having our own bank means that people can go into our dealership and we can show them two different payments, our own or through novated leasing, and the work's all done for them.
“It's designed to expand the services while taking the weight off the shoulders of the consumer to essentially be a one-stop shop.”
According to Merrigan, Skoda’s focus on its finance offering reflects the European convention of advertising new car prices by their weekly or monthly cost, rather than the overall total, as well as approaching ownership in a non-traditional way.
For example through Skoda Choice, a Skoda Elroq 60 Select medium electric SUV costs $141 per week, based on a 60-month term, 20 per cent deposit, and with kilometres travelled capped at 75,000km.
An Enyaq medium to large electric SUV, meanwhile, costs $163 per week using the same terms, also for the entry-level 60 Select grade.
Through a novated lease using the same terms (and based on the person earning $120,000pa), an Elroq 60 Select costs $138 per week, while the Enyaq 60 Select costs $151. Adding in running costs, those prices rise to $186 and $199, respectively.
While Skoda’s finance offering may be intended to streamline the buying experience for customers, it’s also part of a wider industry bid by dealers to raise profits.
“Dealers are experiencing declining profitability in the current market and are thus focused on improving performance in all areas of the business, including the provision of finance to consumers,” said James Voortman, CEO of the Australian Automotive Dealer Association (AADA).
“Australian dealers don’t have strong levels of finance penetration relative to those in other global markets, and we have not seen much growth in the percentage of customers captured by dealers.
“There is clearly an opportunity, but it’s a very competitive market.”
“Skoda is not going to shift the market, that's not our job. We offer a package that is potentially more sensible than the alternatives,” added Merrigan.
“We’ll happily sell a car for cash, of course. But when you think about buying a car, it’s a depreciating asset, which all cars are until they’re, say, 30 years old and they start appreciating again.
“Having a finance product where the residual value is protected is what's done in other markets and makes more sense.”
A born-and-bred newshound, Kathryn has worked her way up through the ranks reporting for, and later editing, two renowned UK regional newspapers and websites, before moving on to join the digital newsdesk of one of the world’s most popular newspapers – The Sun. More recently, she’s done a short stint in PR in the not-for-profit sector, and led the news team at Wheels Media.
