As Q4 came to an end, Director Spencer Blake, reflected on one of the most rip-roaring years Xcite Car Leasing has ever seen and how the vehicle leasing sector's looking primed for 2026…
The impact of the EV grant programme
I feel the EV grant was a good idea but that it’s had limited short-term impact in the Contract Hire and leasing channel. Every car that’s eligible for the grant is now more expensive to lease than before that grant, mainly due to the impact on the residual value. The money would have perhaps been better spent supporting used EVs; if these become better value, it helps to bolster the residual values on new cars and engenders confidence from leasing companies, encouraging more aggressive pricing strategies.
Chinese entrants still going strong
The new Chinese entrants were incredibly aggressive in 2025, and I see no sign of this abating in 2026. There was an incredible stat shared by CAP HPI this year that showed it took both Toyota and Kia 10 years to gain 1% market share. MG under Chinese ownership achieved that in 5 years, BYD in 2 years and currently Jaecoo, Chery and Omoda are on track to achieve 1% of the UK new car market in less than 12 months!
This has been helped by the lower tariffs combined with a very aggressive pricing strategy. It brings Xcite Car Leasing, as a broker, massive opportunities, both with the new entrants but also the incumbent manufacturers. We have seen a few look to the broker market where they hadn’t previously, to help them combat the Chinese entrants and protect their market share. In 2026 I expect us to be able to offer our customers competitive pricing on more makes and models than ever before.
Intense competition continues
The competition among leasing companies, funders and manufacturers continues unabated. 2025 saw the broker market consolidate, with some smaller brokers ceasing trading, others who have seen the value in appointed representative (AR) partnerships, and still others who have been acquired to form larger businesses, thus benefiting from economies of scale and shared resources.
We have also seen the top 15 brokers dominate the online space. In terms of the lease companies themselves, it’s been a challenging year. Many are feeling the effects of losses from EV disposals at end of lease which has made them very cautious about writing more of this business. On a positive note, it does feel like the EV residuals have stabilised and once the EVs that were leased 2 or 3 years ago wash through, the lease companies should be in a better place to look to build their fleets again.
Xcite Car Leasing has multiple routes to market in addition to personal leasing, including a fleet management arm incorporating BCH, Salary Sacrifice, as well as Retail PCH. We’ve also partnered with the AA, the largest motoring brand in the UK, to further expand our reach. Brokers who only operate in one sector may struggle over the medium term.
ZEV mandate progress
Although there seems to be some talk that the Government will push back the end of ICE, it’s difficult for manufacturers to keep pivoting strategy and the acceleration towards EV is already well under way.
I don’t see the price of new ICE falling, but I do expect petrol and diesel vehicles to become slightly cheaper to lease as the RVs improve based on lack of used supply in 3 and 4 years’ time. That said, many lease companies may hold margin to help offset the losses experienced on EV disposal. It’s similar for the manufacturer; if they can retain profit in the ICE it helps offset the losses they’re taking in order to force EV into the market.
Road-tested to the limit
This year has been the most challenging I’ve encountered in the 21 years spent running this business. Winning both the contract to partner with the AA and another key tender, to manage a single fleet of over 2100 vehicles (within two weeks of each other) in late November 2024, pushed our people, systems and processes to the limit. Our teams have grown rapidly and been thoroughly road tested in 2025.
We experienced record months in August, September and October boosted by AA deals, those through our ARs, and high delivery figures, followed by a lull during October half term that continued, as a result of people having one eye on the budget and the other on Christmas.
Spencer's top leasing tips for 2026
2025 was about ensuring we had the infrastructure in place to manage key new contracts, whilst also not losing sight of delivering a market-leading service for our existing customers.
In 2026, our focus will be on working hard to ensure we provide an excellent service and bring our customers the very best offers. There should be plenty of great deals on makes and models that are completely new to the leasing scene, resulting from the intense competition we’re seeing.