During years 4 and 5 the customer surrenders almost £7k in additional benefits. Under the block policies that Motability have, insurance and roadside assistance costs per car are an absolute fraction of what an individual private customer would pay and added to tyres, servicing & MOT costs would still be under £1k in total for the vast majority of cars over the 2 extra years . That leaves around £6k for depreciation. I guess some cars may depreciate by £6k in years 4 and 5, but many of the typical Motability cars won’t, given that most depreciation is in the first 3 years.
Then you have to factor in that the biggest cost for Motability is the capital outlay of buying a new car. Those extending leases by 2 years reduce this burden on Motability by two thirds, from every 3 years to every 5 years. So you can add that saving (quite substantial) back on to the £6k minus depreciation.
I fully understand why people are feeling forced into lease extensions and it’s true that many of the reasons for this aren’t Motability’s fault, but I’m afraid that nobody will convince me that continuing to charge the full disability benefits in years 4 and 5 is anything other than a very nice earner for Motability Operations.