Leasing sector remains agile but needs clarity

The BVRLA’s latest Leasing Outlook report highlights a sector that remains agile but is also seeking clarity around the impact of EU-Exit, the Coronavirus pandemic and the transition to zero-emission motoring.

The report categorises this uncertainty into four broad themes: 

  • Supply Chains - leasing companies are looking forward to a rebound in demand for fleet vehicles as the economy recovers but are concerned about the potential for extended lead times and the reputational damage that could ensue. 
  • Brexit - the type of EU-Exit that happens will have a huge impact on business confidence, lead times, the cost of new vehicles and the ease with which they can be moved around the UK and Europe. 
  • Residual Values - strong residual values have been one of the few positives in 2020, but the leasing industry is concerned about the long-term economic impact of the pandemic and the used market’s capacity to absorb a large influx of electric vehicles. 
  • Liquidity - the financial and administrative burden of providing forbearance to those hit by the pandemic will last well into 2021 and there are signs that the supply of motor finance is also tightening.  

Amidst this uncertainty, the latest Leasing Outlook forecasts where the market is heading in the first half of 2021. Members expect battery electric vehicles (BEVs) to hit 6% of the total lease car fleet by the middle of next year, with Plug-in Hybrids (PHEVs) hitting 9%. Petrol’s market share will begin to plateau at around 38%, with diesel’s market share slipping under 50% for the first time at 46%.