The United Kingdom’s vehicle leasing fleet has passed two million vehicles for the first time, according to the British Vehicle Rental and Leasing Association (BVRLA). The industry body’s latest Leasing Outlook report puts the combined car and van lease fleet at 2,079,575 vehicles, a rise of 12.9 per cent year-on-year. Growth has outpaced the wider market, where new car registrations rose by 3.5 per cent and van registrations declined by 10 per cent over the same period.
The milestone confirms the leasing sector’s growing role in the national fleet. Its members now represent a combined fleet of 4.6 million cars, vans and trucks, equivalent to one in ten cars and one in six vans on UK roads.
Electric vehicles drive the expansion
Leasing operators and their fleet customers are leading the UK’s transition to battery electric vehicles, which now account for 48 per cent of the business contract hire (BCH) car fleet. Average new additions to the BCH fleet emit 43.9g/km of CO2, a figure that points to an increasingly electrified intake.
The composition of growth has shifted markedly across customer types. Business contract hire grew by 10 per cent, while salary sacrifice arrangements rose by 125 per cent, making them the standout performer of the reporting period. Personal contract hire (PCH), by contrast, declined by 4.3 per cent as household budgets remain under pressure.
Growth against a backdrop of margin pressure
The expansion has been delivered despite mounting strain on profitability. The report records a 36 per cent deterioration in leasing companies’ confidence over future margins, as operators continue to absorb losses linked to electric vehicle residual values. Persistent pressure on those values, combined with wider economic uncertainty, has squeezed margins across the sector.
Customers are also managing their commitments more cautiously. Leasing companies report a growing trend towards contract extensions, with businesses and consumers deferring replacement cycles to manage rising costs. The shift keeps vehicles on fleet for longer and reflects a more guarded approach to long-term financial commitments.
Used leasing grows as buyers seek value
The market for used leasing stock is expanding quickly. Used PCH contracts rose by 619 per cent year-on-year to reach 23,171 cars, as price-sensitive customers turned to the second-hand market. Demand for used electric vehicles is expected to rise further as values stabilise.
Maintenance provision has become standard practice across new contracts. Some 64.5 per cent of new BCH car contracts and 99.8 per cent of new salary sacrifice contracts now include maintenance, underlining the sector’s shift towards full-service motoring packages.
What comes next for the sector
Looking ahead, the BVRLA expects continued growth in business contract hire and salary sacrifice, alongside rising demand for used leasing on electric cars. That optimism is offset by expectations of sustained pressure on margins as cost inflation, residual value risk and economic uncertainty persist.
BVRLA Chief Executive Toby Poston described crossing the two million vehicle milestone as a significant achievement that underlines the strength of demand for the sector’s flexible, low-risk model. Sustained progress, he cautioned, will depend on greater market stability and clear, consistent policy signals from government.