September 2024
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.
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).
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.
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.
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.
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.
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.
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.
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.
By Vehicle Type
By Lease Type
By End Use
By Region
September 2024
September 2024
September 2024
September 2024
Dr. Arjun Patel is a distinguished expert in the automotive industry, holding advanced degrees in Automotive Engineering and Mechanical Engineering. His expertise spans automotive market dynamics, technological advancements, and sustainable practices. Dr. Patel excels in conducting in depth research and analysis on market trends, consumer preferences, and the economic implications within the automotive sector. He is renowned for his insightful publications on topics such as electric vehicles, autonomous driving technologies, and the evolution of sustainable transportation solutions. Dr. Patels research contributions have significantly advanced understanding in the field, earning him recognition as a leading authority in automotive research and analysis.
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