The UK’s vehicle leasing sector posted modest growth of 0.65% in 2024, according to the British Vehicle Rental and Leasing Association (BVRLA), as the market navigated subdued consumer confidence and economic uncertainty.

The latest edition of the BVRLA’s Leasing Outlook report, covering data to the end of Q4 2024, highlights divergent trends between personal and business leasing, as well as between vehicle types. While car leasing volumes rose 4.9%, van leasing fell 10.96%, driven largely by budget constraints and caution among operators.

Business Contract Hire (BCH) continued to gain ground, growing 6% year on year and accounting for the majority of vehicles on the BVRLA fleet. Salary Sacrifice schemes also expanded rapidly, increasing 61% during the year. Battery electric vehicles (BEVs) comprised nearly 90% of new Salary Sacrifice additions.

BCH customers also showed strong appetite for electric models, with BEVs accounting for 54% of all new BCH cars added to the BVRLA fleet in Q4 2024. Among private customers, BEV adoption rose significantly: penetration in Personal Contract Hire (PCH) rose from 16% in Q4 2023 to 28% in Q4 2024. Growth was supported by manufacturers offering targeted incentives to meet their obligations under the Zero Emission Vehicle (ZEV) Mandate.

Despite the broader growth in electrified and business-focused segments, the PCH market contracted by 13.4% during the year. BVRLA members reported an increase in contract extensions and delays in customers committing to new agreements, reflecting the impact of cost-of-living pressures on private motorists.

Leasing firms responded to this shift by expanding used car leasing products. Although still a small proportion of the market, used leasing volumes rose 8.5% in Q4 2024 compared with the previous quarter. Used vehicles accounted for 3.5% of new PCH fleet additions, significantly above their 1% share of the total leasing fleet. Market volatility and an oversupply of second-hand EVs contributed to this growth, with falling residual values prompting more flexible lease options.

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Commenting on the report, BVRLA Chief Executive Toby Poston 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.”