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The global car leasing market size was USD 69.27 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with car leasing witnessing a negative impact on demand across all regions amid the pandemic. Based on our detailed analysis, the global market exhibited a lower growth of -20.6% in 2020 compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 73.30 billion in 2021 to USD 123.87 billion in 2028 at a CAGR of 7.8% during the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
A lease is a type of contract in which the owner transfers the right to use the vehicle hassle-free to the user within a specified period in exchange for regular payments. In recent years, there has been tremendous adoption of leased vehicles in developing and developed countries. It offers the user various advantages such as new vehicles after every few years. Monthly payments for a leased car are lower than purchased vehicles amid lease payments based on the car's depreciation during the lease term, not the vehicle's full value. Therefore, the user can lease premium & expensive vehicles without buying them. In recent times latest car leasing Industry trends such as on-demand vehicles with or without driver facilities are expected to benefit the leasing industry. Low maintenance cost is one of the major factors fueling the market growth over the forecast period.
COVID-19 Impact: Lockdowns and Restrictions Hampers Growth of Auto Industry
The COVID-19 pandemic has impacted the car leasing industry worldwide. In late March, the auto industry began to face the impact of the coronavirus on their products and services owing to complete lockdown and travel restrictions globally. In developing countries such as India and South Korea, more than 90% of people have started working from home. Stringent social distance regulations imposed by governments have completely changed the market scenario for leasing companies. The North American and European region has been hit hard by the coronavirus pandemic, and the demand for car leasing has been drastically reduced. The pandemic has also primarily affected the economy in many developing and developed nations, resulting in employee layoffs, reduced monthly income, and employment uncertainty.
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Adoption Of Big Data And IoT to Aid Growth
In recent years, leasing companies have largely used the internet of things (IoT) to maintain and manage fleets. The IoT helps to transfer and collect data with the help of the embedded sensors. This, in turn, helps the companies access real-time data that helps in easy diagnostics of vehicles in case of break-down. Implementation of the virtual key solution to unlock and lock the door helps avoid several keys. For example, Hertz, one of the largest players in the market, is looking forward to implementing IoT to ease the operation of the virtual key. Therefore, this is expected to bode well for the global car leasing market growth during the forecast period.
Growing Smart Cities Initiatives and Urbanization to Drive Market
Factors such as the rising urbanization and the increasing smart city initiatives globally are anticipated to drive the growth of this market. Smart cities need an efficient transportation system that helps avoid traffic congestion and reduce traveling time. As the World Health Organization (WHO) reports, around 50% of the world’s population lives in urban areas, and this share is expected to rise to 60% by 2025. A large part of the population uses more and more cars, which exacerbates road traffic congestion and parking problems in urban areas. This has led to the rapid development of the public transportation system.
Increasing Sale of Electric and Hybrid Electric Vehicles to Boost Market Growth
Conventional vehicles account for one of the major shares of air pollution globally. The increasing fuel cost and high maintenance are some of the major reasons that have attracted consumers to lease a car that is environment friendly. Besides, the rising awareness regarding the growing air pollution and stringent emission norms has fueled the demand for battery and hybrid EV leasing in recent years.
High Expenses of Car Leasing to Restrain Market Growth
Car leasing consists of expenses such as gap insurance. This gap insurance is one of the major burdens to the user as this still gets continued even if the leasing term gets over. Renewal of a new subscription gets added to the expense as the user pays for the new car as a down payment and its insurance. Long-term leasing is a loss-making deal to the user as the dealer who owns the vehicle bears the depreciation cost of the car and can sell the vehicle at his will.
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Business Use Segment to Dominate Market
Based on application type, the global car leasing market is segmented into personal use and business use.
The business use segment is expected to dominate the market during the forecast period. In recent years most of the organization are inclined towards leasing a car to their upper management employees. This helps the employees to travel at their will instead of company transport. After every 3-5 years, the organization offers an upgraded leased car to the team member. It gives an option to keep the vehicle when the team member completes his service in his organization. This helps the team member save a huge amount of money as a brand new car is offered by the organization.
The personal use segment is expected to showcase considerable growth in the market during the forecast period. More and more consumers are inclined towards leasing a car instead of buying it. Leasing helps the consumers avoid paying heavy down-payment, which is not feasible by most users.
Open-End Segment to Lead Market Share
The open-end segment is expected to be the fastest-growing segment during the forecast period. The open lease is also known as a finance lease. This lease is a type of rental agreement which obliges the lessee to make a payment in one go at the end of the lease agreement. The amount equal to the difference between the surplus of the asset and the fair market value. This type of lease is primarily preferred for business purposes. For example, when transport companies purchase many cars, vans, and trucks, open leases prove to be beneficial amid unlimited mileage provided under the lease terms.
The closed-end lease is expected to show decent growth in the market. This lease is majorly used for personal use, as the user’s only requirement in this type of lease is to run the vehicle only from destination A to destination B, i.e., from work to home, and that too at a predictable mileage with a minimum maintenance cost.
North America Car Leasing Market Size, 2020 (USD Billion)
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Based on region, the market is segmented into North America, Europe, Asia Pacific, and the Rest of the World.
North America dominates this market, followed by Europe. North America and Europe jointly account for a major car leasing market share in the global market. They are expected to maintain their dominance amid the low rate of interest provided by the leasing companies in this region. This, in turn, attracted various consumers to opt for leasing a car rather than buying it.
The Asia-Pacific region has shown steady growth due to the reduced penetration of car rentals in total registrations. Rising awareness among users and the increasing cost of car ownership are major reasons to show steady growth in the market. Developing countries such as India and China are expected to be favorable for the market amid the increasing disposable income of consumers in these countries.
The market in Rest of the World is growing at a moderate rate as there is lack of awareness among buyers regarding car leasing services and are often considered expensive compared to buying a car.
Avis Budget Group is a Key Player in the Market
Avis Budget Group is one of the major players in car lease companies. It is a global provider of mobility solutions, and its leasing business segments offer trucks and cars to consumers. Avis's budget group consists of 165000 connected vehicles and 5000 mobility lab connected cars under its connected cars business segment. The global footprint of the organization strengthens its market position in the market.
An Infographic Representation of Car Leasing Market
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The global market research report provides a detailed car leasing market analysis and focuses on key aspects such as leading companies, product types, and leading product applications. Besides this, the report offers insights into the current market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.
Value (USD Billion)
Application Type; Lease Type; and Geography
By Application Type
By Lease Type
Fortune Business Insights says that the global market size was USD 69.27 billion in 2020 and is projected to reach USD 123.87 billion by 2028.
In 2020, North America stood at USD 22.41 billion.
The market is projected to grow at a CAGR of 7.8% during the forecast period (2021-2028).
The business type segment is expected to be the leading segment in this market during the forecast period.
The increasing adoption of electric and hybrid electric vehicles is driving the global market.
Avis Budget Group is the leading player in the global market.
North America dominated the market share in 2020.
The rising inclination towards emission-free and fuel-efficient vehicles is expected to drive the adoption of leasing a car.
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