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The car leasing market size is forecast to increase by USD 55.3 billion at a CAGR of 9.24% between 2023 and 2028. The market is experiencing significant growth, driven by the trend towards vehicle performance, maintenance needs, comfort, and fuel efficiency. Off-lease cars are fueling the used car market, providing an affordable option for consumers. However, there are challenges to market expansion, including limited customer awareness and acceptance in semi-urban and rural areas. Additionally, the rise of car rental, short-term rentals, car sharing services, ride hailing applications, and subscription-based services like Car subscription services and Careem are disrupting traditional leasing models. These trends and challenges require leasing companies to adapt and innovate to remain competitive in the market.
Car leasing has emerged as a popular solution for city residents in urban areas, addressing their transportation needs in the face of parking congestion and transportation infrastructure challenges. This market offers a hassle-free alternative to long-term vehicle ownership, catering to various segments covered, including vehicle type and customer preferences. Affordability is a significant factor driving the growth of the market. Short-term rentals and car sharing services have gained traction, while long-term leases provide a cost-effective alternative to purchasing a vehicle outright. The rise of ride hailing applications, subscription-based services, and vehicle subscription services further boosts the market's expansion. The Internet of Things (IoT) adoption and smart city initiatives have influenced the car leasing landscape, enabling seamless contract management and regular payments through digital channels.
Furthermore, car leasing and vehicle leasing contracts are predetermined for a specific time, providing customers with the flexibility to upgrade or downsize their vehicles as needed. The evolving preferences of city dwellers continue to shape the market, ensuring its continued growth and relevance.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The commercial segment is estimated to witness significant growth during the forecast period. Car leasing has become an attractive option for small and medium-sized enterprises (SMEs) seeking cost-effective transportation solutions for their employees. By entering into a lease agreement with car leasing companies, SMEs enable their employees to utilize well-performing vehicles without the significant upfront costs associated with purchasing. Leasing contracts also offer the flexibility of purchasing the vehicle at its residual value at the lease's end. Moreover, car leasing agreements provide tax benefits, as taxes are calculated based on monthly payments. Some leasing companies include fuel charges up to a predetermined limit and maintenance costs in the lease, further enhancing affordability.
Furthermore, various car leasing options are available, including short-term rentals, long-term leases, car sharing services, ride hailing applications, and subscription-based services like Automotive Subscription Services and Careem. These services cater to diverse business needs, ensuring comfort, fuel efficiency, and flexibility for SMEs.
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The commercial segment was valued at USD 61.10 billion in 2018 and showed a gradual increase during the forecast period.
Europe is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The North American market is experiencing notable growth, accounting for approximately one-quarter of the global market volume. This trend is driven by the appeal of upgrading to new vehicles with advanced features over a shorter period. Factors contributing to this market's favorability include a high purchasing power and a quality infrastructure that supports the automotive industry. However, the increasing public debt and inflation rate may limit the ability of middle-class individuals to purchase cars outright. Instead, they are turning to car leasing, short-term rentals, long-term leases, car sharing services, ride hailing applications, and subscription-based services. These offerings prioritize vehicle performance, maintenance needs, comfort, and fuel efficiency, making them attractive alternatives to traditional car ownership.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The rising technological obsolescence of older cars is the key driver of the market. The market is undergoing a transformative shift, with enhanced accessibility and convenience becoming key drivers for growth. Automotive manufacturers are integrating advanced technologies from industries such as telecommunications, connectivity, artificial intelligence, metals, and heavy industries to create modern vehicles with desirable features.
Furthermore, these include mobile apps for real-time information, transparent pricing, efficient communication, telematics, and connectivity features. The trend towards leasing rather than purchasing is gaining momentum due to the significant cost savings it offers. As a result, the number of vehicles leased is expected to increase during the forecast period, making car leasing a lucrative market.
The off-lease cars fueling used car market is the upcoming trend in the market. The market is undergoing a transformative shift with enhanced accessibility and convenience becoming key drivers. Mobile apps and real-time information are enabling lessees to make informed decisions, while transparent pricing and efficient communication facilitate seamless transactions.
Furthermore, telematics and connectivity features are also gaining popularity, with companies like Reliance Jio and JioMotive leading the way in vehicle security and real-time insights. However, the increasing number of off-lease vehicles entering the market each year poses a challenge. Car leasing companies are exploring innovative solutions, such as selling these vehicles as used cars or offering lessees the option to purchase them at the end of the lease period. Despite the negative impact on profits due to increased competition and discounted prices, the market is expected to continue growing, driven by the convenience and flexibility that car leasing offers.
The limited customer awareness and acceptance in semi-urban and rural areas is a key challenge affecting the market growth. Car leasing is undergoing a transformative shift, making it more accessible and convenient for a wider audience. Mobile apps and real-time information are enhancing the leasing experience, providing transparent pricing and efficient communication between lessees and lessors.
Furthermore, telematics and connectivity features are revolutionizing vehicle security and offering real-time insights into vehicle performance and usage. However, penetrating semi-urban and rural markets remains a challenge due to the complexity of leasing terminologies and cultural perceptions of car ownership. To address this, lessors must focus on simplifying leasing language and adapting to local market conditions. By doing so, car leasing can become a viable alternative to car purchases for a larger and more diverse customer base.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Autoflex Leasing: The company offers car leasing services such as new vehicle leasing and pre-owned leasing.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
Car leasing has emerged as a popular alternative for urban area residents to meet their transportation needs, especially in congested cities where parking and transportation infrastructure can be a hassle. This market caters to both individuals and businesses, covering various vehicle types and lease types. The rapid adoption of car leasing is driven by evolving preferences for hassle-free alternatives to long-term commitments. However, car leasing comes with pitfalls such as interest rates and insurance costs, which can impact the affordability of the lease deals. The latest models and consumer preferences continue to shape the market, with subscription models gaining traction due to their mobility needs-oriented approach.
Furthermore, the market is witnessing a transformative shift towards enhanced accessibility, convenience, and real-time insights through mobile apps and telematics. Connectivity features, vehicle security, and maintenance needs are becoming essential considerations for consumers. Economic uncertainties and changing interest rates can impact the demand for long-term contracts, while travel restrictions and company adoption of IoT and smart city initiatives contribute to the market's expansion strategies. Commercial vehicles and the passenger vehicle category are significant segments in the market, with emerging markets showing potential for growth due to increasing per capita income.
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Market Scope |
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Report Coverage |
Details |
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Page number |
168 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 9.24% |
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Market growth 2024-2028 |
USD 55.3 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
7.84 |
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Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
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Performing market contribution |
Europe at 34% |
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Key countries |
US, China, UK, Germany, and France |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Autoflex Leasing, Avis Budget Group Inc., Bayerische Motoren Werke AG, BNP Paribas SA, Caldwell Leasing, Deutsche Leasing AG, Enterprise Holdings Inc., Executive Car Leasing Co., ExpatRide International Inc., Hertz Global Holdings Inc., International Car Lease Holding, LeasePlan Corp. NV, Masterlease Group, Mazda Motor Corp., Mercedes Benz Group AG, Orix Corp., Porsche Automobil Holding SE, SIXT SE, Societe Generale SA, and Zoomcar India Pvt. Ltd. |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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