What is the leasing market?
The car leasing market is an alternative way for a business or individual to have access to a new car, without having the capital to buy one.
Leasing a car is often considered a more affordable option than buying a car, mainly because you can select, within reason, the car you would like to drive, the cost of which is taken as a fixed monthly fee.
At the end of the lease (normally 3 years, depending on the age of the car), the car is replaced with a new model if the contract is renewed.
Is it a stable market?
Unlike owning a car, the leasing company takes into account the depreciation of the vehicle; as such, there is no risk in the future. This appeals to business owners, as not only can the tax liability be accurately forecast, but there are also the economies of scale that can be achieved with large fleets of rental cars.
It is widely predicted within the auto industry that within the next 10 to 15 years car leasing will be the norm, and most of us will avoid the expense of a new car to follow this trend.
Market trends
Following this prediction, past market trends have shown that there is a slowdown in the decline of the UK used car market. Compared to the year-on-year drop in new car sales of 26.6%, the used car market only fell 5.9% in the first half of 2010.
Over the past decade, the UK used car market has grown by 7% in total, despite the negative media attention it attracts and inconsistent promotion by car manufacturers.
According to these figures, constant demand for used cars has helped franchisee dealer networks weather a storm; This is before the long-awaited scrapping incentive plan came to light.
According to research firm Trend Tracker, nearly four used cars were sold for every one new in 2010.
The effect on the leasing market
More than half of the demand for new cars is business; As such, this change in purchasing behavior has led to a change of course on the part of the leasing companies themselves. Retaining the car after the 3-year contract ends is now encouraged as this will help combat the reduction in the number of contracts available, as well as a drain on the potential losses that would result from the disposal of vehicles. .
So who is the target market?
Originally the domain of corporations and large companies, it is now increasingly common for the individual to choose a rental car. In the same case, commercial customers have not decreased, but there has been a shift towards more economical and ecological models.
