The UK’s vehicle leasing fleet has seen its year-on-year growth outperform the wider market, surpassing two million vehicles for the first time, according to the BVRLA.
The findings in the association’s Leasing Outlook report revealed that the combined car and van lease fleet grew by 12.9% year-on-year to 2,079,575 vehicles.
Over the same period, the wider automotive market saw new car registrations rise by 3.5% and van registrations decline by 10%. Mirroring recent quarters, growth has been driven by the car market, with the car fleet up 15% year-on-year, while vans increased by 6.8%.
Established trends for business and personal customers also continued. Business contract hire (BCH) was up 10%, while salary sacrifice rose by 125%. In contrast, personal contract hire (PCH) declined by 4.3%.
Leasing operators and fleet customers now account for 48% of the BCH car fleet. But the transition is “placing strain on financial performance”, it added, with leasing companies showing a 36% deterioration in future margin confidence as they continue to absorb losses linked to EV residual values.
The current economic climate is also influencing how customers manage their lease agreements. Leasing companies report a growing trend towards contract extensions, as businesses and consumers look to defer replacement cycles and manage rising costs.
This shift is keeping vehicles on fleet for longer and reflects a more cautious approach to long-term financial commitments, it added.
Toby Poston, BVRLA Chief Executive said:
“Crossing the two million vehicle milestone is a significant achievement for the leasing sector and underlines the strength of demand for its flexible, low-risk model. However, this growth is being delivered against a backdrop of real financial strain.
“Persistent pressure on electric vehicle residual values, combined with wider economic uncertainty and global unrest, means margins are being squeezed like never before. Sustained progress will depend on greater market stability and clear, consistent policy signals from Government.”
Image courtesy of Green Car Guide
