Car Leasing Market Size to Attain USD 1373.96 Mn by 2033

Market Overview

The global car leasing market size is estimated to reach USD 1373.96 million by 2033, up from USD 724.67 million in 2023, at a compound annual growth rate (CAGR) of 6.71% from 2024 to 2033.

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The car leasing market is a significant segment of the automotive industry, offering consumers an alternative to traditional car ownership. In a leasing agreement, individuals or businesses pay a monthly fee to use a vehicle for a predetermined period, typically two to four years, after which they return the car to the leasing company. The car leasing market is influenced by economic conditions, interest rates, consumer preferences, and manufacturer incentives. Changes in interest rates, for example, can impact monthly lease payments.

In recent years, there has been growing interest in subscription-based models, where consumers pay a monthly fee that includes not just the car lease but also insurance, maintenance, and other services. These subscription services offer a hassle-free alternative to traditional leasing and ownership models, appealing to consumers seeking convenience and flexibility. Additionally, the expansion of corporate and fleet leasing segments, along with the integration of advanced technologies, presents significant growth opportunities for leasing companies.

Key Trends and Findings

• The increasing focus on sustainability and environmental concerns has fueled the adoption of electric vehicles. As governments worldwide implement stringent emission regulations and offer incentives for EV adoption, leasing companies are diversifying their fleets to include more electric and hybrid vehicles.
• The rise of subscription-based models and mobility services is transforming the car leasing landscape. Consumers, especially millennials and urban dwellers, are increasingly gravitating towards flexible and hassle-free mobility solutions that offer access to a variety of vehicles without the long-term commitment of traditional leases.
• Digitalization is revolutionizing the car leasing process, making it more convenient, transparent, and accessible to consumers. Online leasing platforms and mobile apps allow customers to browse inventory, compare lease options, customize terms, and complete transactions entirely online.
• The market in North America is characterized by a mature and highly competitive landscape, driven by factors such as consumer preference for flexible mobility solutions, technological advancements, and robust economic conditions. The United States accounts for the majority of market share, with leasing being a popular option among urban residents and corporate fleets.
• The Asia-Pacific is witnessing rapid growth, fueled by urbanization, rising disposable incomes, and increasing demand for mobility solutions in emerging economies such as China and India.

Market Drivers

Consumer Demand for Flexibility

The growing consumer preference for flexible mobility solutions is anticipated to drive the growth of the car leasing market during the forecast period.  The appeal of outright car ownership started to diminish, particularly among younger demographics prioritizing flexibility and liberation from prolonged financial obligations. The societal transition towards prioritizing experiences over possessions favoured leasing agreements, providing the opportunity to swap vehicles regularly and enjoy the newest models without the depreciation worries associated with ownership.

This trend goes with evolving lifestyles characterized by a desire for on-demand services and adaptable mobility options. Car leasing provides consumers with the freedom to choose vehicles personalized to their immediate needs and preferences, without the constraints of ownership, maintenance, or depreciation concerns. Moreover, leasing accommodates shifting consumer behaviours, such as urbanization and the rise of shared mobility, by offering flexible terms and convenient access to vehicles when needed. Also, the appeal of leasing vehicles significantly increases as consumers are transitioning towards electric vehicles (EVs).

Market Restraints

Mileage Restrictions and Penalties

Car leasing agreements commonly impose mileage restrictions, with penalties for exceeding these limits. This limitation may dissuade potential lessees, especially those with lengthy commutes or irregular travel habits. For individuals who heavily rely on their vehicles for daily transportation or frequently embark on long-distance trips, the prospect of incurring additional fees for surpassing mileage limits could make leasing less appealing. Moreover, the restrictive nature of mileage caps may constrain lessees' freedom and flexibility in utilizing the vehicle according to their needs and preferences. Consequently, consumers may opt for alternative mobility solutions or reconsider their decision to lease a vehicle, impacting leasing companies' ability to attract and retain customers.

Lack of Ownership Equity

One significant limitation of car leasing is the absence of ownership equity upon lease termination. Unlike purchasing a vehicle, where ownership rights and potential equity accrue over time, leasing entails returning the vehicle to the lessor at the end of the lease term. This lack of ownership stake can be perceived as a disadvantage by some consumers, particularly those who prioritize long-term investment and asset accumulation. Lessees may view leasing as akin to long-term rental, with no tangible asset to show for the payments made throughout the lease period. Consequently, individuals seeking to build equity or asset value may opt for vehicle ownership instead of leasing, despite the potential for higher initial costs and on-going maintenance expenses.

Market Opportunities

Increasing Focus on Sustainable Leasing Options

Amidst a mounting emphasis on environmental sustainability, leasing companies are presented with a compelling opportunity to leverage the growing demand for electric and hybrid vehicles.  One of the ways for doing this is through leasing electric vehicles (EVs) or hybrid cars. These vehicles emit lower levels of pollutants compared to conventional petrol or diesel cars and therefore are environment friendly. There are several benefits of leasing electric vehicles (EVs) or hybrid cars such as lower operating costs, tax benefits, and access to low emission zones.

In the United Kingdom, companies have the opportunity to enjoy tax incentives when leasing electric and hybrid vehicles. These incentives encompass reduced Benefit in Kind (BIK) tax rates and 100% first-year allowances for zero-emission vehicles. To explore further details regarding the tax advantages associated with leasing environmentally friendly vehicles, we encourage you to consult our comprehensive guide on the tax benefits of business car leasing.

In France, the state offers financial assistance to citizens through the "ecological bonus" program, aiding in the purchase or lease of new or second-hand low-emission vehicles. This assistance entails grants for electric cars with CO2 emissions of up to 20g/km and a value below €47,000, providing €5,000 for individuals (up to 27% of the purchase price) and €3,000 for companies (up to 27% of the purchase price).

Moreover, by actively promoting the adoption of electric and hybrid vehicles through leasing arrangements, companies contribute to broader efforts aimed at reducing carbon emissions and mitigating the environmental impact of transportation.

Key Segment Analysis

Vehicle Type Segment Analysis Preview

The SUVs segment captured a substantial market share of 34.97% in 2023. One significant factor contributing to the segment's dominance is the increasing consumer preference for SUVs, driven by their versatility, spaciousness, and perceived safety features. SUVs appeal to a wide range of consumers, including families, outdoor enthusiasts, and urban commuters, due to their ability to accommodate varying lifestyles and transportation needs. Furthermore, the growing popularity of crossover SUVs, which combine the attributes of traditional SUVs with the handling and fuel efficiency of cars, has further fueled the segment's growth.

End Use Segment Analysis Preview

The commercial segment held largest market share of 72.16% in 2023. Leasing offers tax advantages to businesses and offers commercial entities the flexibility to adapt their fleet sizes according to fluctuating operational needs without committing to the long-term financial obligations associated with vehicle ownership. This enables firms to lower their operational expenses, consequently driving growth within the segmental market throughout the forecast period. Additionally, favorable leasing terms, including lower upfront costs and customizable lease agreements, have made leasing an appealing option for businesses looking to optimize their operating expenses. Furthermore, regulatory incentives promoting the adoption of eco-friendly vehicles within commercial fleets have further propelled the growth of the commercial segment within the car leasing market.

Regional Insights

North America dominated the market with 38.92% of shares in the global car leasing market. North American consumers value flexibility and convenience, making car leasing an attractive option. The ability to access vehicles without the long-term commitment of ownership aligns with the lifestyle preferences of many consumers in the region, particularly urban residents and young professionals. Additionally, leasing companies in the region have introduced innovative lease models such as subscription-based services and short-term leases, providing to evolving consumer preferences. These models offer flexibility, convenience, and access to a variety of vehicle models, driving market growth in the region.

Asia Pacific is expected to grow at a substantial CAGR of 8.11% during the forecast period. The rapid urbanization and population growth in countries like China, India, and Southeast Asian nations are fueling the demand for flexible transportation solutions. As urban residents seek convenient and cost-effective mobility options, car leasing emerges as a viable alternative to vehicle ownership. Furthermore, the rising disposable incomes and expanding middle-class populations in the region are driving consumer spending on transportation. Car leasing provides individuals with access to vehicles without the upfront costs associated with purchasing, aligning with the preferences of budget-conscious consumers.

Recent Developments by Key Market Players

• February, 2024: Ayvens and Stellantis revealed a multi-billion euro framework agreement aimed at incentivizing Ayvens' affiliates to purchase up to 500,000 vehicles for its long-term leasing fleet across Europe within the next three years. Initial substantial deliveries are anticipated to commence in the first half of 2024 and persist throughout the year.
• August, 2023: MOBILIZE Financial Services UK acquired a 36.6% stake in Select Car Leasing with the aim of offering multi-brand leasing agreements, aspiring to provide a comprehensive range of products and services to private individuals, SMEs, and companies. This collaboration merges the brand reputation and proficiency of one of the UK's foremost Contract Hire brokers with the financial robustness of Mobilize Financial Services UK.
• June, 2023: Ford partnered with Uber to provide rideshare drivers with flexible leases on electric vehicles. Through the Ford Drive initiative, Uber drivers had the opportunity to lease a Mustang Mach-E for variable durations, ranging from one to four months, contingent upon the location. Initially, the program was piloted in three cities Los Angeles, San Diego, and San Francisco.
• February, 2023: Maruti Suzuki India revealed its collaboration with SMAS Auto Leasing India Pvt Ltd to enhance its car leasing operations. SMAS now stands as the fifth partner offering a range of the automaker's vehicles for white plate subscriptions. These subscriptions involve registering the user's name as the vehicle owner, with the vehicle pledged to the subscription partner.
• November, 2021: Mahindra Finance, a subsidiary of the Mahindra Group, introduced its vehicle leasing and subscription service 'Quiklyz'. This initiative was initially announced in September 2021, with the goal of providing customers with faster acquisition and simpler upgrades, thereby eliminating the perception of car ownership as a long-term commitment. Quiklyz enables customers to conveniently browse and lease their preferred vehicles online.

Market Companies

Some of the key players in car leasing market are ALD Automotive, Silverstone Leasing, Arval, LEX AutoLease Limited, Deutsche Leasing, Autoflex Leasing, Sixt Leasing, Europcar Mobility Group, LeasePlan Corporation, ARI Fleet Management, and Select Car Leasing, among others.

Market Segments

By Vehicle Type

• Hatchback
• Sedan
• SUV
• MUV
• Others

By Lease Type

• Open-ended
• Close-ended

By End Use

• Commercial
• Non-commercial

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • U.K.
  • France
  • Germany
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • South-East Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America
• Middle East & Africa
  • GCC Countries
  • South Africa
  • Rest of Middle East & Africa