The UK Car and Van Sector: A Growing but Divided Industry

The UK car and van sector has experienced a modest 0.65% growth in Q4 2024, according to the latest Leasing Outlook report by the British Vehicle Rental and Leasing Association (BVRLA). While this growth may seem modest, it is a welcome boost in a challenging economic climate. The BVRLA report highlights vastly diverging performances between cars and vans, with business demand versus consumer agreements showing distinct trends. The combined car and van fleet size achieved a six-year high in the final quarter of 2024, and the 0.65% rise in volume was a bonus in an erratic economy. However, the Leasing Outlook report also reveals a growing divergence between cars (up 4.9%) and vans (volume down 10.96%). This disparity is not limited to the fleet size; business contract hire (BCH) and salary sacrifice agreements also show distinct performances. The BVRLA members’ combined car and van fleet has reached a six-year high in the final quarter of 2024. The growth is attributed to the continued popularity of business contract hire and salary sacrifice agreements. ### Salary Sacrifice Growth
• The salary sacrifice market grew 61% in 2024, with nearly nine in 10 additions to the salary sacrifice fleet being for battery electric vehicles (BEVs). • Battery electric vehicles (BEVs) dominated the salary sacrifice fleet, accounting for 54% of all new BCH cars added to the BVRLA fleet in Q4 2024. • The average new BCH car CO2 emissions are just 43.7g/km, making BEVs an attractive option for businesses looking to reduce their carbon footprint. ### Business Contract Hire (BCH) Growth
• Business contract hire (BCH) also saw its popularity grow further in 2024, continuing an established trend. • Up 6%, BCH accounts for the majority of the BVRLA’s leasing fleet. • BEVs dominated BCH agreements, accounting for 54% of all new BCH cars added to the BVRLA fleet in Q4 2024. ### Private Buyers and Personal Contract Hire (PCH)
• Private buyers also adopted BEVs at a greater rate, with penetration among personal contract hire (PCH) agreements growing from 16% in Q4 2023 to 28% in Q4 2024. • The growth of BEVs in PCH agreements is attributed to the increasing popularity of used EVs. • Used vehicles accounted for 3.5% of PCH additions to the BVRLA leasing fleet, outperforming the overall fleet share of 1%. • Another motivation for this growth is the volatility in the used EV market, where vehicle supply is currently outstripping demand and putting pressure on residual values. ### Fleet Maintenance and Service
• The BVRLA’s Leasing Outlook report reveals that 74% of all new BCH car contracts, and 66% of new van contracts, included maintenance. • The growth of used car leasing offerings has helped leasing companies adapt to the financial pressures faced by private customers and van operators. • The report also highlights the importance of service, maintenance, and repair in the leasing industry. ### Industry Insights and Commentary
• The BVRLA’s Leasing Outlook report is produced quarterly, with the latest version containing data to end of Q4 2024. • The statistics and analysis are bolstered by commentary from Auto Trader (used market trends), cap hpi (BEV growth), and Fleet Assist (impacts on service, maintenance, and repair).

Widening Gaps in the Industry

The report highlights a growing divergence between cars and vans, with business demand versus consumer agreements showing distinct trends. The growth of business contract hire and salary sacrifice agreements has contributed to the increase in fleet size. However, the report also reveals a growing divergence between cars (up 4.9%) and vans (volume down 10.96%). This disparity is not limited to the fleet size; business contract hire and salary sacrifice agreements also show distinct performances. The report also highlights the importance of financial incentives in driving the uptake of electric cars. The recent changes to the ZEV mandate will influence their necessity. Financial incentives are the biggest lever to alter action in the industry, and the BVRLA remains committed to making their voices heard where it can make a difference.

Used Car Leasing Growth

Used car leasing grew again in the Q4 2024, up 8.5% on the previous quarter. Another motivation for this growth is the increasing popularity of used EVs.

Salaries and Sustainability

The BVRLA’s Leasing Outlook report highlights the importance of salaries and sustainability in the leasing industry. The report reveals that 74% of all new BCH car contracts, and 66% of new van contracts, included maintenance. This growth in maintenance is attributed to the increasing popularity of used EVs, which require more frequent maintenance than traditional vehicles.

Conclusion

The UK car and van sector has experienced a modest 0.65% growth in Q4 2024, according to the latest Leasing Outlook report by the British Vehicle Rental and Leasing Association (BVRLA). The BVRLA remains committed to making their voices heard where it can make a difference, and the report highlights the importance of financial incentives in driving the uptake of electric cars. The industry is adapting to the financial pressures faced by private customers and van operators, with used car leasing growth contributing to this trend. The growth of used EVs is driving the adoption of used car leasing, and the volatility in the used EV market is putting pressure on residual values. The BVRLA’s Leasing Outlook report provides valuable insights into the UK car and van sector, highlighting the importance of salaries, sustainability, and service, maintenance, and repair in the leasing industry.