The UK leasing industry is set for growth in 2026, defying wider negative economic trends, according to the first BVRLA Leasing Outlook report. Flashes of optimism amid economic headwinds are largely driven by strong performance in Business Contract Hire (BCH) and salary sacrifice schemes, with BEVs accounting for 47% of the BCH car fleet.
Key highlights:
- Fleet expansion: The BVRLA car lease fleet has exceeded 1.5 million vehicles for the first time in seven years.
- Employer advantage: Despite low retail confidence, employers are leveraging competitive new car pricing (partly due to new Chinese entrants) to expand their company and salary sacrifice fleets.
- EV focus: More affordable electric vehicles (EVs) are entering the market, making salary sacrifice schemes accessible to a broader range of (lower-rate) taxpayers.
- PCH resilience: Although Personal Contract Hire (PCH) figures show a decline, anecdotal evidence from brokers suggests a boom driven by aggressive 'commit to purchase' tactical deals from manufacturers.
- Data adjustments: The BVRLA plans to adjust its official fleet size data this year to include major captive finance operations, potentially showing the broker fleet is 20-25% larger than current figures indicate.
Emerging patterns and potential challenges:
- Used car leasing: There's been a 290% year-on-year increase in used BCH contracts, to 19,644 cars and vans. A strong confidence in EV battery reliability means leasing firms are now offering used EVs with contracts up to seven or eight years, to provide significantly cheaper rentals than new models.
- Cost pressures: Intense pressure to lower costs is leading to longer lease terms, with customers requesting five-year car and seven-year van leases.
- Regulatory uncertainty: The critical reaction to the proposed 2028 eVED mileage tax persists, with the industry fearing it contradicts government efforts to incentivise EV adoption.
The BVRLA Leasing Outlook report combines aggregated market data and expert insight to provide an unrivalled perspective of the market.