Europeans Move From Car Ownership To Leasing

Thursday, 20. January 2022

The leasing industry has grown in the past five years, with private ownership falling in Europe from 53% of total market in 2013, down to 42% in 2021, according to research by Jato Dynamics.

The report, ‘An industry in flux: Leasing in the automated age’, showed that leasing has gained popularity – it is estimated that five million vehicles were leased in the UK, last year – with 1.9 million of those being individual or personal contracts.

Separate research from Fleet News recently showed that, after two consecutive years of decline, the FN50 – the UK’s top 50 leasing companies by risk fleet size – had stabilised over the past 12 months with a slight rise in the number of funded cars and vans to 1,663,421 (up by 1,101 units).

Jato said the rise in demand for leasing can be explained by evolving priorities for consumers – where individuals previously thought it was important to own a car, perceptions have shifted where the focus is now on the usage of a vehicle.

David Krajicek, chief executive officer at Jato Dynamics, said: “The leasing sector has evolved significantly in recent years.

“Impacted by many factors – such as technological advances, digitalisation, and changing consumer priorities – OEMs and leasing companies must now ensure they shift away from manual processes and adapt to changing customers’ wants and expectations.

“Those that fail to respond to this evolution risk damaging business relationships, sales prospects, and their chances to succeed in the increasingly competitive market.”

Leasing rather than ownerships poses benefits including lower maintenance costs, greater flexibility and the ability to upgrade to new models and technology – which is important as consumers now expect to consistently access new products and services, according to Jato.

Research from Salesforce found that three quarters (75%) of consumers’ site search queries are new each month. The growing desire for new products and features can be linked to the rise in popularity for leasing subscriptions, rather than committing to one, single vehicle for several years, said Jato.

In 2020, 72% of customers expected to be able to apply for a leasing contract entirely online, according to reserach by Capgemini. Jato said the research highlights that automation has a role to play in the automotive sales processes.

With the leasing marketing growing, creating a seamless customer experience through digitalisation and automation will be the ‘vital’ next step for OEMs and leasing service providers to accelerate their sales and profit margins, Jato said.