The UK’s vehicle leasing sector recorded modest growth of 0.65% in 2024, according to the latest BVRLA Leasing Outlook report, with the business sector and continued uptake of battery electric vehicles (BEVs) helping to offset declining personal demand.
In a challenging year marked by fluctuating consumer confidence and tightening budgets, business contract hire (BCH) continued its upward trajectory, increasing by 6% and consolidating its position as the dominant leasing product. Salary sacrifice was another key growth area, with volumes up 61%, almost entirely driven by BEVs, which made up nearly 9 in 10 of all additions through the scheme.
Appetite for BEVs was consistent across BCH contracts, with 54% of new cars added in Q4 2024 being fully electric. Uptake among private customers also rose sharply, with BEVs accounting for 28% of new personal contract hire (PCH) agreements in Q4 – up from 16% a year earlier. The rise was supported by manufacturer-backed offers and financial incentives introduced to meet Zero Emission Vehicle (ZEV) Mandate targets.
However, personal leasing struggled overall, with PCH volumes falling 13.4% during the year. The BVRLA noted a rise in contract extensions and delayed renewals, with many customers opting to defer decisions amid ongoing financial pressures.
In response, leasing companies have increased their focus on used car leasing to offer more affordable solutions. From a relatively low base, this part of the market grew 8.5% in Q4 alone. Used cars made up 3.5% of new PCH additions during the quarter – outperforming their 1% share of the overall leasing fleet. Much of the momentum is being driven by high used EV supply and the pressure this has placed on residual values.
Van leasing saw a 10.96% fall in volume as operators faced rising costs and cautious sentiment. In contrast, the car leasing segment grew 4.9%, underpinned by fleet and salary sacrifice demand.
Toby Poston, chief executive of the BVRLA, said: “Again we are seeing the adaptability and resilience of the sector. Local and global economic uncertainty is causing many customers to hold fire but there remain pockets of optimism. To see the leasing fleet grow in such challenging conditions is positive, but the gaps between segments are widening.
“It is no surprise to see the segments performing well are where they have suitable support in place. Business customers have a greater ability to absorb short-term fluctuations, while also benefitting from targeted Government incentives to drive the uptake of electric cars. Financial incentives are the biggest lever to alter action and the recent changes to the ZEV Mandate will influence their necessity. Personal customers and van operators desperately need increased attention and we remain committed to making their voices heard where it can make a difference.”
