What is a leasing market?
The car leasing market is an alternative way for a business or an individual to have access to a new car without the capital to afford to buy it.
Car leasing is often viewed as a more affordable option than buying a car, mainly because you can choose, for reasonable reasons, the car you would like to drive, the cost of which is taken as a fixed monthly fee.
At the end of the lease agreement (usually 3 years, depending on the age of the car) the car is replaced by a new model if the contract is renewed.
Is this a stable market?
Unlike owning a car, a leasing company takes vehicle depreciation into account; as such, there is no risk further down the line. This appeals to business owners, as not only tax liability can be accurately excluded, but savings can also be achieved at the expense of scale with large fleets of leased cars.
In the automotive industry, it is widely predicted that car leasing will become the norm over the next 10-15 years, and most of us will avoid spending on a new car to follow this trend.
Market trends
Following this forecast, past market trends have shown that there is a slowdown in the decline of the used-car market in the UK. Compared to the annual decline in sales of new cars by 26.6%, the used car market only decreased by 5.9% in the first half of 2010.
Over the past decade, the market for used cars in the UK has grown by a total of 7%, despite the negative media attention it is visiting and the inconsistent promotion by automakers.
According to these data, the steady demand for used cars helped the dealer’s franchise networks drive a storm; this is before the long-awaited waste management incentive scheme came to the fore.
According to research firm Trend Tracker, in 2010, almost four used cars are sold for each new product.
Impact on the leasing market
More than half of the new demand for cars are corporate; since such a change in consumer behavior has led to a change in the rate of leasing companies. Car placement after a 3-year contract is currently being promoted, as this will help combat the reduction in the number of available contracts, as well as indenting possible losses that may arise from the sale of vehicles.
So who is the target market?
Originally in the field of corporations and large businesses, it is now becoming more commonplace for choosing a leased car. At the same time, business customers have not declined; rather, there has been a transition to more economical and environmentally friendly models.
