The UK vehicle leasing sector has reached a record size, but growth is uneven across market segments, according to the BVRLA’s latest Leasing Outlook Report. The quarterly report, which covers data to the end of Q2 2025, indicates expansion in business-focused car funding while parts of the sector face reduced customer budgets and greater cost scrutiny.
Business Contract Hire (BCH) agreements grew 7.8% year on year and Salary Sacrifice arrangements rose 118%, the report shows. The BVRLA attributes this performance to increased uptake of electric vehicles (EVs), supported by targeted government incentives and manufacturer discounts. New entrants among vehicle manufacturers and marques are also increasing competition for EV supply, the report notes, reinforcing leasing as a channel to secure vehicles for company fleets.
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In contrast, Personal Contract Hire (PCH) agreements declined 7.6% year on year. The data show a fall in the proportion of PCH agreements that include vehicle maintenance, from 30% in 2024 to 27% in the latest quarter, reflecting heightened cost consciousness among private customers.
“The headline numbers show the leasing fleet is in rude health,” BVRLA chief executive Toby Poston says, while cautioning that “scratching below the surface shows imbalances are growing; the positives are not universal.” He added that financial uncertainty leads businesses and households to delay decisions or tighten spending, and warned that forthcoming fiscal decisions could affect demand.
The light commercial vehicle (LCV) market is showing contraction, with the BVRLA’s van fleet down 6.7% year on year and now representing less than a quarter of the association’s overall leasing fleet. The report links this trend to inflation in new vehicle prices and manufacturers’ emphasis on including electric vans in large orders, both factors that make entering new agreements less attractive. Many operators are choosing to extend existing contracts rather than enter new ones.
The Leasing Outlook includes supplementary analysis from market participants: Autotrader on market trends, cap hpi on battery electric vehicle values, and Fleet Assist on impacts to service, maintenance and repair. The BVRLA publishes the report quarterly and uses the findings to inform industry stakeholders and businesses considering vehicle procurement strategies.
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