- BCH increases 7.5% year on year
- Salary sacrifice rises an incredible 96%
- Brokers showing great adaptability in an uncertain market
- Used EV residual values continue to be a pain point for leasecos
BUSINESS contract hire and salary sacrifice remain the drivers of growth in the latest BVRLA Leasing Outlook report to the end of Q1 2025.
Against this positive backdrop, securing business remains difficult, compounded by uncertainty around the rate and prioritisation of the adoption of electric vehicles, with the last quarter seeing the terms of the Zero Emission Vehicle (ZEV) Mandate softened, before the new Electric Car Grant was introduced in July – apparently with little or no consultation.
“Everywhere you look, there are levers being pulled that are corrupting normal market forces,” said one leasing director in the report.
But overall, there are positives to be taken from the numbers. The BVRLA lease fleet maintained its steady progression towards the two million vehicle mark, with a 4.1% year-on-year increase in Q1, 2025. The rise is the seventh increase in the last eight quarters.
Cars are delivering the growth, increasing their number by 9.6% year-on-year, with business contract hire, fleet management and salary sacrifice all performing strongly. They are also accounting for a greater share of members’ leasing fleets as light commercial vehicle numbers decline – down 10% year-on-year compared to Q1 2024.
“To see the overall leasing fleet grow in uncertain market conditions underpins the adaptability and resilience of the sector. Used leasing is a good example of this, making electric vehicles accessible to more households while trying to reduce the impact of the volatile used market.”
He continued: “Now we need to see others step up to support. Recent policy moves have been focused on feeding the new EV pipeline, which is rapidly heading into a bottleneck as concerns around the used BEV sector only grow.”
The report reflects the prevailing worry about used EV residuals. Some leasing companies say they can now buy a new BEV for less than the price they are trying to sell the same car at three years old, says the report, ‘such is the disorderly discounting in the market’.
Dependable BCH growth
Accounting for the lion’s share of members’ lease fleets, between January and March, business contract hire rose 7.5% year-on-year in a new car market that saw fleet sales increase by 4.6%.
“BCH has now risen quarter on quarter, without interruption, since the first three months of 2022, when it started to recover from the pandemic’s lockdowns,” comments Andy Bruce CEO of Fleet Alliance, winner of the SME Broker of the Year Award.
“We see nothing to stop its rise in popularity, the reasons for which are very persuasive. Firstly, we have a BIK tax regime that is very favourable towards electric cars, with a current rate of 3%, rising to 4% for 2026/7 and 5% for 2027/8. That’s a massive financial incentive for would-be company car buyers.”
“BCH gives known, easily budgeted costs with no hidden surprises and if, like we do, you use a panel of funders to competitively tender each new model on the fleet, the rates can be very attractive.”
“We have now seen news of the first manufacturers’ models that will be available under the ECG scheme, including many popular mainstream makes such as Citroen, Nissan, Renault and Vauxhall.
“This will, we believe, enhance the popularity of BEVs still further within the business sector – but whether it is sufficient to kick-start the private sector is a matter of conjecture.”
Unstoppable salsac
The number of vehicles supplied on salary sacrifice arrangements almost doubled YOY in Q1, 2025. The report says that the 96.2% growth in this method of funding (now 158,173). This huge jump reflects both market growth and improvements the BVLRA has made to the way it collects data. In previous reports it indicated that some salsac agreements might have been classed as BCH but it has now re-assessed the data supplied by funders and the likely contract to the end customer through multiple sources.
The BVRLA has concluded that the salary sacrifice element had been under-reported and has now made ‘an adjustment in the sample data’ and as part of this ‘a number or BCH cars have been reallocated to the salsac market where the end-user aligns’.
A new wave of cheaper electric cars has extended the affordability of salsac schemes and leasing companies report an ever-rising number of 20% tax payers among their customers.
“With stable, low BiK rates for zero-emission cars and a widening pool of both new and used EVs, we believe salary sacrifice will remain the engine of growth for the sector throughout 2025 and well beyond.”
Lovelectric won Best Salary Sacrifice Broker this year in the Broker News Awards 2025. “Demand is being fuelled by two main factors,” Steve continues. “First, there’s now a far greater choice of new EVs – often with deep manufacturer discounts – making the switch to electric more compelling than ever. Second, the inclusion of used EVs in salary sacrifice schemes is opening up the benefit to many more basic rate taxpayers.”
Used car leasing continues its rise
With more new leases every quarter, there is of course a steady supply of cars primed for second-life leases, especially EVs. Used car leasing is expected to continue its upward trend, having grown 16.3% in Q1 2025 with nearly 15,000 vehicles now into their second lease agreement.
Such volumes are tiny, the report says, but ‘leasing companies report keen interest from business and private customers eager to access lower monthly rentals. While early examples of used leasing were under two years of age, ‘extending used vehicle leasing to standard end-of contract three-years-old cars is now very much on the agenda’.
Kelly Marshall, Managing Director of Gateway2Lease, echoes these findings. “Customer behaviour is shifting – consumers seem more open to used vehicles, especially when condition and warranty standards are high, and lower rentals provide an incentive.”
“It has proven to be the perfect fit for salary sacrifice schemes, offering exceptional value for drivers when combined with tax and NI savings”.
“From our perspective, continued levels of success and growth with this product hinges on the comparable price of new vehicles. This, combined with the healthy supply of second hand BEVs being selected for re-lease, are two important factors. As more EVs come off their first lease cycle, and competition within the segment grows, we expect supply to replenish and remain healthy.”
PCH: not down for everyone
Quoting SMMT data showing that private sales rose by 9.5% year on year in the first quarter of 2025, the Outlook notes that personal contract hire volumes declined -3.6%. This continues a trend that has seen PCH fall quarter on quarter every three months since Q3, 2022.
As our Best Volume Broker in 2025, is this the experience of Nationwide Vehicle Contracts?
“Our results tell a different story. We have seen a 31% increase in PCH sales in Q1, supported by steady growth in enquiries, and we expect this trend to continue throughout the year, says Keith Hawes, Director of Nationwide Vehicle Contracts.
“PCP can work for some drivers, but PCH offers clear advantages for those who value flexibility and predictable costs. We work closely with manufacturers to secure competitive deals across a wide range of vehicles, ensuring excellent value for our customers.”
The report also wonders whether this ‘lost’ business may be due to manufacturers offering particularly competitive PCP finance plans.
“With the FCA reviewing some finance products such as PCP, we believe PCH could see further growth as more consumers recognise its benefits and potential cost savings.”
That’s certainly the case with Central Contracts, which says that, like Nationwide, it is seeing growing success in the PCH space, with sales doubling in the last year and continued growth baked in for 2025.
“We are delighted to have topped 10,000 cars per annum in sales and that is also reassuring for the OEM and funding partners,” says Gareth Roberts, Strategy Director of Central Contracts. “We are registering more cars month on month and now have a wider portfolio of vehicles on offer with a range of unique deals in the market.”
While the growth is important, Gareth says it is not been at the expense of customer satisfaction, Central Contracts boasting an industry-leasing 45% renewal rate.
Delayed decisions on vans
A slight uptick between Q4, 2024 and Q1, 2025 in BVRLA members’ van fleet size (to 462,575) was insufficient to offset a 10% year-on-year decline.
The Outlook says that anecdotal accounts suggest that ‘companies have delayed investments in new vehicles until they have worked out how to absorb or mitigate the impact of the increase in employer National Insurance Contributions’.
Our Best Commercial Vehicle Broker Vanaways takes a pragmatic approach.
“National Insurance increases, ZEV mandates, and electric van barriers are real, but our growth at Vanaways proves that with the right partnerships in place, the right sales professionals selling our solutions and the right procurement model, these challenges don’t have to stall decision making.”
“We’ve seen that delayed investment often comes down to uncertainty not unwillingness and our approach is to cut through that uncertainty giving fleet managers and business owners clear total cost of ownership comparisons, realistic lead time forecasts, flexible choice in manufacturers and a whole range of funding options that fit their operational needs today.”
The Outlook reports that despite the growing choices of electric vans, there is ‘minimal demand’ from fleet operators wary of price, payload and range plus the costs of the timeframe to install depot charging infrastructure, and the unsuitability of many public charging stations for LCV use.
Vanaways can steer around eLCV resistance when it’s right for the customer, says Liam. “As a business, we sell fleet solutions. Helping clients adopt electric vans where it genuinely works for their routes, loads, and budgets, and not forcing the issue where ICE still makes sense. Our valued partnerships mean we can deliver the whole solution, from brand new vehicles to charging infrastructure, telematics, and driver tools so that fleets can adopt the right mix of vans with confidence.”
The BVRLA statistics and analysis are accompanied by commentary from Autotrader (market trends), cap hpi (BEV values), and Fleet Assist (impacts on service, maintenance and repair).
Read the full report here
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Russell Hayes’ early career was 14 years of motoring journalism in print (for What Car?), television (for Top Gear), as well as online. Since 2007 he has authored 11 motoring history books on subjects including TVR, the Earls Court Motor Show, the Volkswagen Golf and the original Aston Martin V8 – see Russell Hayes on Amazon. However, he’s not forgotten how to be a motoring journalist and now writes for UK consumer motoring sites and an American classic car magazine – not to mention Broker News. When he’s not writing, Russell can be found in the cinema or planning his next travel adventure.
