SmartGroup FY2025 Results: Live Investor Webcast

Policy Shifts and Market Moves

Australia's salary packaging industry, where companies like Smartgroup help employees reduce taxable income through benefits like novated leasing, has boomed with the rise of electric vehicles. The Fringe Benefits Tax (FBT) exemption for eligible EVs under $91,387—raised for the 2025-26 financial year—has made leasing an EV far cheaper than traditional car ownership. This policy, introduced in 2022, saved lessees an average of $4,000 to $6,000 annually in 2025, accelerating EV sales to over 100,000 units.

Smartgroup, with 870 employees and $311 million in 2024 revenue, reported strong half-year 2025 results: revenue up 7% to $159 million, EBITDA up 13% to $63.6 million. This growth stemmed from 19% higher leasing orders, adding 15,400 novated leases. Yet, the sector faces headwinds. Plug-in hybrids lost FBT exemptions from April 2025, narrowing options and potentially slowing momentum. More critically, the EV discount faces review in 2026, with possible alterations by mid-year.

Beyond policy, merger rumors add tension. In January 2026, reports emerged of Smartgroup considering a scrip merger with FleetPartners, valued at $1.2 billion combined, as private equity firm PEP circles. This could consolidate 40% of the novated leasing market, but risks antitrust scrutiny from the ACCC. Stakeholders include 135 million-share investors, who saw SIQ stock rise 5% post-half-year, and corporate clients like government departments facing higher admin fees if competition dips.

Non-obvious angles include the EV price wars of 2025, where Tesla and BYD discounts pressured yields, yet Smartgroup maintained margins through lower aftermarket attachments. There's also a trade-off: while EVs cut emissions by 60% per vehicle, reliance on salary packaging widens inequality, benefiting higher earners in the 37% tax bracket most. Inaction on reforms could cost the government $500 million in foregone FBT by 2027, per Treasury estimates.