The UK vehicle lease fleet has hit a historic record of 2,144,743 vehicles, driven by surging consumer demand but shadowed by significant underlying tensions.

The new BVRLA Leasing Outlook report for Q2 2026 reveals the overall leasing fleet grew 9.6% year-on-year as the car market surged while vans stagnated.

The car fleet increased by 12.8% year on year to 1,671,318 vehicles, adding around 190,000 cars over the previous 12 months. This was propelled by strong growth among private car drivers and the continued growth of salary sacrifice.

Consumer car finance across the BVRLA fleet increased by 32.4% year-on-year (PCH and salary sacrifice), compared with 4.5% growth in business car finance (BCH, finance lease, fleet management). After a period of sustained contraction, Personal Contract Hire (PCH) grew by 19.6% to 285,469 cars, while salary sacrifice recorded a 51% year-on-year increase.

Growth was heavily driven by aggressive discounting from manufacturers trying to hit regulatory targets, along with competitive procurement deals and customers seeking protection from residual value uncertainty. The report finds that PCH is enabling private drivers to access manufacturer discounts negotiated by funders and brokers, while offering fixed-cost motoring with protection from fluctuating residual values.

Meanwhile, the Business Contract Hire (BCH) car fleet was up 6.6% year-on-year, but executives said growth could be so much better with more clarity over key factors such as the ZEV mandate, future Benefit-in-Kind (BiK) tax rates for company cars beyond 2030, and the general economy.

In contrast, the leased van fleet fell by 0.4% to 473,425 vehicles, as businesses continued to extend existing contracts amid higher replacement costs and uncertainty over future demand. Aligning with this trend for extending contracts, van mileages are increasing while car mileages are falling.

The report also shows that four-year leasing arrangements are increasingly common for business customers, whereas private motorists are evenly spread across two-, three- and four-year contracts.

And the Leasing Outlook report also identifies rapid growth in used vehicle leasing. Used PCH volumes increased 529% year-on-year to 21,929 contracts, while used salary sacrifice grew 168% to 10,685. These increases come from a relatively small base, with leasing companies reporting that further growth is being constrained by the availability of suitable stock and the challenge of making used rentals sufficiently cheaper than heavily discounted new cars.

BEV lease rentals at parity with ICE cars

Battery electric cars (BEVs) have increased their penetration of the BVRLA lease fleet to account for almost half (49%) of the entire fleet, while average new additions to the BCH fleet emit 37.1g/km CO2. These zero-emission cars now account for more than 90% of many leasing company BCH orders, virtually 100% of salary sacrifice cars – percentages well ahead of the ZEV mandate, thanks to the supportive BiK environment.

But BEVs only account for 23% of the PCH market. Leasing executives report that some private drivers are still not considering BEVs, due to range and charging concerns, but the arrival of sub-£25,000 electric cars, from both new entrant and legacy brands, has removed the price barrier previously cited by ‘BEV curious’ customers.

Significant drop in maintenance inclusion

Faced with cost-of-living pressures and a strict focus on corporate bottom lines, more leasing customers are choosing to exclude maintenance to save money.

For Business Contract Hire, the proportion of contracts with maintenance dropped by 6% year-on-year. However, the overall majority (66.5%) of new BCH car agreements still include it.

Meanwhile, for Personal Contract Hire, the percentage of new contracts including maintenance has dropped by 23% year-on-year. Only 20.8% of new PCH agreements now include it.

Leasing companies are actively reviewing how they price maintenance packages. Because motorists are choosing lower annual mileages, a significant portion of cars will only need one service and one set of tyres over the entire duration of the lease.

Low industry margin outlook

Despite confidence in future fleet growth, the commercial outlook remains challenging. BVRLA members recorded a +60% confidence score for fleet growth, while confidence in future margins stands at -50%, reflecting weak economic growth, intense competition and continued investment requirements.

Toby Poston, chief executive of the BVRLA, said: “Leasing is proving increasingly attractive to private drivers. Competitive deals are bringing more people into the market, while the ability to hand a vehicle back at the end of the agreement removes some of the uncertainty around future values.

“That growth is encouraging, but there are some important contrasts underneath it. Vans remain under pressure and leasing companies are still absorbing significant residual value losses on electric vehicles. With the ZEV mandate under review and future company car tax rates still to be confirmed, greater certainty would give businesses and drivers more confidence to make longer-term decisions.”

Looking ahead, BVRLA members forecast the total leased car and van fleet to grow by a further 4% between Q2 2026 and Q2 2027, reaching more than 2.22 million vehicles. The BEV car fleet is forecast to increase by 12% over the same period to almost 930,000 vehicles.

The October 2026 BVRLA Leasing Outlook also examines the ZEV mandate review, aftersales support for new vehicle manufacturers and new evidence on the long-term durability of electric vehicles, with insights from Cap HPI, Fleet Assist and New AutoMotive.

The full BVRLA Leasing Outlook report is available to access online now.