Investment in commercial vehicles by UK-based companies has reached record levels in the last year, according to BNP Paribas Leasing Solutions.

Businesses acquired £6.6bn (€8.9bn) worth of commercial vehicles such as trucks and vans through leasing, up by 7% from the £5.9 bn invested the previous year.

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BNP Paribas Leasing Solutions said investment in commercial vehicles has been driven by the recovery in the retail economy and an increase in the number of people setting up new businesses.

The retail sector has recovered significantly from the recession, growing for the twenty-eighth consecutive month in July 2015, the longest period of growth since May 2008. Since online sales now represent 20% of all non-food related retail sales in the UK, BNP Paribas Leasing Solutions explains that this has created a strong demand for vans to fulfil home delivery orders.

The growth in new businesses and self-employment is also driving demand for new vehicles. 2014 saw the creation of a record number of new businesses. Over 580,000 companies were registered with Companies House, up by 10% from 2013.

BNP Paribas Leasing Solutions notes that some of the strongest demand for vans comes from self-employed workers in building and associated trades. From 2009 to 2014, the number of self-employed contractors and builders grew by 10% to over one million.

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Tristan Watkins, country manager of BNP Paribas Leasing Solutions said: "Investment in vehicles is vital for the growth and success of both SMEs and larger businesses."

"Whether it is a builder promising to turn up at a particular time, or a delivery company fulfilling the ‘last mile’ of an internet order by delivering a package, businesses depend on the reliability of their fleet. Not only do breakdowns mean lost time and money, they also damage the business’s reputation."

BNP Paribas Leasing Solutions adds that for those businesses wanting to expand and invest in new commercial vehicles, leasing can offer important advantages over bank funding and loans.

Tristan Watkins explains "For major equipment purchases, leasing can be a better option than a traditional bank loan. Because the lending is linked to a particular asset, the monthly payments can be fixed over the entire life of the lease, and at a rate which reflects the lender’s expert knowledge of the assets they are lending against. Van dealers can access this expertise to help guide their customers to the model that best suits their purposes."

BNP Paribas Leasing Solutions adds that with the introduction of the Euro 6 emissions standard in September 2015, all vehicles on sale must now conform to new limits on CO2 production and should qualify for reduced road tax rates. A greater availability of Euro 6 compliant vans may drive more sales from businesses that have delayed investment until the new models became available.

Value of leasing commercial vehicles (£bns)