The normal lease is 36 months, with the possibility of e tending it. Its not a right. Cars lose a lot of money from years 3 through 5 and a So more expensive servicing and tyres. If Motability encounter higher losses, then as a private company , they cannot be expected to absorb them.
Somebody on PIP extending for 2 years is paying £8,000 for the privilege. I’d put money on the fact that servicing and tyres for the average Motability car over those 2 years is no more than £1,000. That leaves £7,000 for depreciation, but I’d also bet that the average Motability car depreciates by far less than that in years 4 and 5, given that the bulk of the depreciation will have already happened before the lease extension. These reasons are why I consider lease extensions to be poor value for the customer and a nice earner for Motability!
As previously stated, if this happens I’m convinced that it’s far more about Motability being under pressure to support the UK car industry, which is struggling as private customers aren’t switching to EVs in the numbers required and people are keeping their cars longer. The average age of cars on U.K. roads has just exceeded 10 years for the first time.