New figures released by the British Vehicle Rental and Leasing Association (BVRLA) shows that the number of people opting for personal car leasing, over buying a new vehicle, is growing rapidly.
There has been significant growth across the market with light commercial vehicles (LCVs) and van leasing also enjoying a boost but personal vehicle leasing has outstripped both of them. According to BVRLA's latest figures taken from its members, LCVs have seen a ten per cent increase in the corporate sector, while the personal leasing sector recorded far more impressive growth.
Van leasing for personal use grew by an incredible 6,022 per cent, with nearly 14,000 vehicles on the books. Personal car leasing also saw a comfortable increase as it was boosted by 118 per cent, taking it to more than 800,000 units.
Why the big increase?
This growth isn't just limited to the UK, across international markets there has been a rapid increase in the number of people opting for car leasing contracts. Indeed, in the US, there has been such an growth in the number of drivers wanting this type of deal that it is thought that leasing now accounts for a quarter of all new vehicle sales across the country.
Many in the sector can't agree on why this sudden burst of popularity has come to the personal car leasing sector and why the new car market is growing rapidly in still reasonably tough economic climes.
However, there are a number of factors that could be contributing to this jump in personal car leasing. As always, the giants play their role in controlling the market. Top-class manufacturers, like BMW, Jaguar and Mercedes, are working to predict and apply higher residual values to their vehicles, making leasing more attainable for a higher number of drivers.
Lease prices encompass a number of factors but most importantly they must take into consideration the difference between a vehicle's new price and how much value it is likely to lose once the contract ends.
Manufacturers can make car leasing contracts cheaper by increasing their vehicles predicted residual value, therefore making the difference between new and used models smaller.
Life after the recession
However, it isn't just your expensive, luxury car makers that are making leasing much more viable for people across the globe. There is also the issue that people have less disposable income after the financial crash to afford the upfront cost of a new car. The market has seen the problem that average new car prices are growing ahead of people's salaries. People are struggling to put enough cash aside to cover a brand new vehicle, which means that they are turning to other methods to allow them to get behind the wheel of a new car without the huge upfront cost.
Although some customers will turn to finance options, this comes with various negatives, such as high interest rates and lack of flexibility. This has caused many drivers to be attracted to car leasing as a way to update their vehicle.
The way people feel about cars hasn't changed. Many see them as an important way to make a first impression and control how people see you on a personal and professional level. However, in the current economy people just can't warrant the expense of a brand new car. Many people were affected by the financial crash, and even those that weren't have seen their spending habits change as a result. This has caused people to change the ways that they are able to get their hands on cars.
Personal car leasing is rising in popularity, thanks to the flexibility, reduced upfront costs and a wider range of models being available.
UK Carline itself has seen a 33 per cent increase in the number of people opting for personal car leasing contracts over the last 12 months. Being the UK's largest car leasing company, our large range of models has helped us take advantage of the increasing popularity of the market itself. Buying a new car is great, but it often comes with a whole heap of drawbacks, which can see drivers having to compromise on quality to protect their finances.
However, with our leasing deals, a driver can get behind the wheel of a car that is just a few weeks old, with prices that are more competitive than a great deal of finance options on comparable vehicles.
« « Race the Stig | Families urged to get involved in UK’s biggest road safety event » »