Vehicle leasing firms are seeing customer caution seeping into boardrooms, with challenging economic conditions causing many to delay the decision to acquire new vehicles. That is according to the BVRLA’s latest Leasing Outlook Report, which shows widening gaps between Business Contract Hire (BCH, up 7.5% yoy) and Personal Contract Hire (PCH, down 3.6% yoy), as well as between cars (up 9.6% yoy) and vans (down 10% yoy).
Even with BCH and salary sacrifice seeing growth, the association’s leasing members have outlined that securing that business is requiring more work than ever. Those challenges are being compounded by uncertainty around the rate and prioritisation of the adoption of electric vehicles, with the last quarter seeing the terms of the Zero Emission Vehicle (ZEV) Mandate softened, before the new Electric Car Grant was introduced in July.
Such policies have dented confidence that the volatility in the used battery electric vehicle (BEV) market will improve in the short-term. As a result, used car leasing is expected to continue its upward trend, having grown 16.3% in Q1 2025 with nearly 15,000 vehicles now into their second lease agreement.
Toby Poston, BVRLA Chief Executive said: “It remains a mixed picture in leasing. Business contracts are in good health as companies stick to their renewal cycles, with their sustainability goals helping to drive the UK’s transition to cleaner, greener vehicles. That strong performance is just about offsetting the challenges materialising in the personal and van markets, where budgets are tight and incentives to support EV uptake have been less prevalent.
“To see the overall leasing fleet grow in uncertain market conditions underpins the adaptability and resilience of the sector. Used leasing is a good example of this, making electric vehicles accessible to more households while trying to reduce the impact of the volatile used market. Now we need to see others step up to support. Recent policy moves have been focussed on feeding the new EV pipeline, which is rapidly heading into a bottleneck as concerns around the used BEV sector only grow.”
Outside of the transition to electric vehicles, the van fleet has seen its numbers decline overall, continuing a trend that began at the start of 2024. Steep price inflation for diesel models and the impact of National Insurance Contributions rising are causing operators to extend rather than replace contracts.
The BVRLA’s Leasing Outlook report is produced quarterly, with the latest version containing data to end of Q1 2025. The statistics and analysis are bolstered by commentary from Auto Trader (market trends), cap hpi (BEV values), and Fleet Assist (impacts on service, maintenance and repair).
The full report can be read on the BVRLA website.
