Strong Growth in Leasing Channels
Business contract hire (BCH) rose by 10%, while salary sacrifice schemes surged by 125%, driven by strong demand for tax-efficient electric vehicle benefits. In contrast, personal contract hire (PCH) fell by 4.3%, indicating increased caution among private customers due to ongoing cost pressures.
UK Leasing Fleet Grows Ahead of Wider Market
The UK’s leased fleet grew 12.9% to 2,079,575 vehicles, with cars up 15% and vans up 6.8%, outperforming the wider automotive market. This compares to just 3.5% growth in new car registrations and a 10% decline in van registrations, highlighting the continued strength of leasing demand.
Electrification Driving the Market
Battery electric vehicles (BEVs) now account for 48% of the BCH car fleet, demonstrating the leasing sector’s key role in supporting the UK’s transition to zero-emission transport and accelerating EV adoption across business fleets.
Financial Pressure and Market Challenges
Despite strong growth, leasing companies reported a 36% deterioration in future margin confidence, largely driven by volatility in electric vehicle residual values and wider economic uncertainty. These pressures continue to impact financial performance across the sector.
Longer Contracts and Changing Behaviour
The BVRLA also reports a rise in contract extensions as both businesses and consumers delay vehicle replacement cycles. This trend reflects increasing cost sensitivity and a more cautious approach to long-term financial commitments.
Outlook for the Leasing Sector
Looking ahead, the sector remains optimistic about continued growth in BCH and salary sacrifice schemes, alongside rising demand for used EV leasing. However, this outlook is tempered by ongoing inflationary pressure, residual value risk, and broader economic uncertainty shaping the market landscape in the coming years.
