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The UK’s vehicle leasing fleet has seen its year-on-year growth outperform that of the wider market, surpassing two million vehicles for the first time. Such growth has been achieved despite growing pressure on profitability as economic headwinds and electric vehicle depreciation reshape the market outlook, according to the BVRLA’s latest Leasing Outlook report.
The Leasing Outlook report shows the combined car and van lease fleet grew by 12.9% year-on-year to 2,079,575 vehicles. Over the same period, the wider automotive market saw new car registrations rise by 3.5% and van registrations decline by 10%. Mirroring recent quarters, growth has been driven by the car market, with the car fleet up 15% year-on-year, while vans increased by 6.8%. Established trends for business and personal customers also continued. Business contract hire (BCH) is up 10%, while salary sacrifice rose by 125%. In contrast, personal contract hire (PCH) declined by 4.3% as household budgets remain under pressure.
Leasing operators and their fleet customers are driving the UK’s transition to battery electric vehicles, which now account for 48% of the BCH car fleet. However, this transition is placing strain on financial performance, with leasing companies showing a 36% deterioration in future margin confidence as they continue to absorb losses linked to EV residual values.
The current economic climate is also influencing how customers manage their lease agreements. Leasing companies report a growing trend towards contract extensions, as businesses and consumers look to defer replacement cycles and manage rising costs. This shift is keeping vehicles on fleet for longer and reflects a more cautious approach to long-term financial commitments.
Toby Poston, BVRLA Chief Executive said: “Crossing the two million vehicle milestone is a significant achievement for the leasing sector and underlines the strength of demand for its flexible, low-risk model. However, this growth is being delivered against a backdrop of real financial strain.
“Persistent pressure on electric vehicle residual values, combined with wider economic uncertainty and global unrest, means margins are being squeezed like never before. Sustained progress will depend on greater market stability and clear, consistent policy signals from Government.”
Despite these pressures, the sector continues to adapt to structural change across vehicles, technology and customer demand. The Leasing Outlook Report also features commentary from Fleet Assist, cap hpi, and Autotrader, providing insights across vehicle repair trends, LCV values and market stability
Looking ahead, the sector expects continued growth in BCH 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.
View or download the report in full.
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Additional quotes from report contributors
Karen Ewer, Operations Director at Fleet Assist, said: “For decades the automotive service and repair sector was defined by mechanical expertise, but that landscape is changing rapidly. Modern vehicles have become an integrated network of software, sensors, connectivity platforms and artificial intelligence. Consequently, vehicle operators and their SMR garage networks need to transition towards a complex environment of technology validation and digital system assurance.”
Dionne Hanlon, Head of Commercial Vehicle & Motorcycle Valuations at cap hpi, said: “January 2026 marked a significant moment for the LCV market, with new registrations falling to just over 17,500 units—the lowest January total since 2013, and it matters because it reinforces a long running structural issue, rather than implying a short-term wobble.”
Rachael Jones, Director of Automotive Finance at Autotrader, said: “As we move into the second quarter of 2026, the UK car market finds itself in a complex but stable position. The cautious optimism seen at the start of the year remains, supported by a solid first quarter characterised by high buyer engagement and steady stock turnover.”
Headline figures from Leasing Outlook report:
- BVRLA lease fleet grows 12.9% year-on-year to 2,079,575 cars and vans (p4)
- Car fleet up 15% year-on-year; van fleet up 6.8% (p5&9)
- BCH car fleet up 10% year-on-year; salary sacrifice up 125% YOY; PCH down -4.3% YOY (p5)
- BEVs account for 48% of the BCH car fleet, and average new additions to BCH fleet emit 43.9g/km CO2 (p6)
- 64.5% of all new BCH car contracts and 99.8% of new salary sacrifice contracts include maintenance (p7)
- 619% YOY increase in used PCH contracts to reach 23,171 cars (p8)
- -36% - leasing companies’ pessimistic outlook for their margins (p9)
