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Leasing volumes up in 2025 but margins shrinking, BVRLA warns

Leasing volumes were up 8% year-on-year in 2025, at 1,980,000, with the growth driven by business contract hire (BCH), which was up 7.9% year-on-year.

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The British Vehicle Rental and Leasing Association (BVRLA) found that leasing volumes were up in 2025, but has warned that margins are shrinking.

Leasing volumes were up 8% year-on-year in 2025, at 1,980,000, with the growth driven by business contract hire (BCH), which was up 7.9% year-on-year.

Personal contract hire (PCH) was down 3.7% in 2025, due to tightening household budgets.

The BVRLA found that electric vehicles (EVs) accounted for 47% of the BCH fleet, reducing average emissions to 40.2 g/km, a record low.

Total car leasing volumes were up by 12.5%, while van volumes were down by 4.2%.

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Toby Poston, chief executive at the BVRLA, said: “The vehicle leasing sector continues to play a vital role in driving new vehicle registrations and delivering road transport decarbonisation. 

“But any satisfaction from these achievements is tempered by the relentless pressure of compliance costs, cash-strapped customers, and rampant EV depreciation. 

“Our industry is agile, resilient, and innovative, but it needs to work in partnership with the Government. 

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“The faltering used EV market and the badly designed and poorly timed eVED regime proposals are two prime examples where we need an urgent policy rethink.”

The BVRLA’s Leasing Outlook Report also found that three-year leases remain the benchmark, but contracted mileages are being reduced as consumers seek to reduces monthly rates.

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It expects margins to continue to shrink in 2026.

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Dylan Setterfield, head of forecast strategy at cap hpi, said: “While our new car forecasts for the next five years are still being finalised, we were already expecting new car sales to fall from 2027 onwards due to the ZEV Mandate.

“The required proportions leap from 38% in 2027 to 52% in 2028, equating to a massive 37% increase in new EVs in a flat market. 

“We are expecting manufacturers to discontinue many petrol and diesel models in the UK to maximise the ratio of electric cars registered from 2027 onwards, because that will be the only way that many can avoid swingeing fines.”

The BVRLA also reported that new EV models and brands are fuelling the growth of salary sacrifice.

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Rachael Jones, director of automotive finance at Autotrader: “Projections for this year indicate that volumes will accelerate further, reaching approximately 10.03 million and matching the market scale last seen before the pandemic.

“This underscores the sector’s remarkable resilience and the fundamental importance of vehicle car ownership in the UK. 

“The used car segment will be the primary growth engine, with sales expected to rise by 3% year-on year to over 7.9 million units in 2026.

“In contrast, the new car market is forecast to see a more modest 1% growth, achieving around 2.035 million registrations.”

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