UK car leasing holds steady amid uncertainty, BVRLA report finds

The latest Leasing Outlook Report from the British Vehicle Rental and Leasing Association (BVRLA) reveals a picture of quiet growth and sectoral divergence as the UK’s vehicle leasing market grapples with ongoing economic uncertainty and shifting consumer confidence.

According to the report, the overall BVRLA leasing fleet grew in 2024 by a modest 0.65% year-on-year, reflecting both resilience and recalibration in response to tightening household budgets and erratic business conditions.

One of the clearest fault lines is between van and car leasing. While van volumes fell sharply by 10.96%, car leasing bucked the trend, growing by 4.9%. The report attributes this divergence to increased cost sensitivity among van operators and a stronger support ecosystem, including incentives, for cars, particularly electric models.

Business Contract Hire (BCH) continued to be the bedrock of the leasing market, growing by 6% year-on-year and now making up the majority of the BVRLA leasing fleet. BCH also played a leading role in the transition to electric vehicles, with battery electric vehicles (BEVs) making up 54% of new BCH cars added in Q4 2024.

The Salary Sacrifice segment emerged as another bright spot, growing by a staggering 61%, driven overwhelmingly by BEV uptake –nearly 90% of Salary Sacrifice fleet additions were electric vehicles.

Across the board, the appetite for electric vehicles continues to grow, aided by manufacturer-backed offers designed to meet Zero Emission Vehicle (ZEV) Mandate targets. Among Personal Contract Hire (PCH) agreements, BEV penetration nearly doubled from 16% in Q4 2023 to 28% in Q4 2024.

Despite this progress, the PCH market overall contracted sharply. The number of vehicles on PCH agreements dropped by 13.4%, as private consumers held back amid economic headwinds. Contract extensions and delays in signing new leases were widely reported by BVRLA members.

To counteract the softness in the personal leasing market, leasing companies are innovating with used car leasing products. From a small base, this segment grew 8.5% in Q4 2024 compared to the previous quarter. Used vehicles made up 3.5% of PCH additions, well above their current 1% share of the total leasing fleet. The oversupply of used BEVs has also contributed to this shift, pressuring residual values and opening up affordability.

“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.”

Poston added that government incentives remain a crucial driver, particularly for electric vehicle uptake: “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… Personal customers and van operators desperately need increased attention and we remain committed to making their voices heard where it can make a difference.”

Read or download the full report here.