Car Leasing Market to Grow by USD 55.3 Billion (2024-2028), Rising Technological Obsolescence of Older Cars Boosts Market, Report on How AI is Driving Market Transformation - Technavio

NEW YORK, Feb. 5, 2025 /PRNewswire/ -- Report with the AI impact on market trends - The global car leasing market size is estimated to grow by USD 55.3 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 9.24% during the forecast period. Rising technological obsolescence of older cars is driving market growth, with a trend towards off-lease cars fueling used car market. However, limited customer awareness and acceptance in semi-urban and rural areas poses a challenge. Key market players include 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 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 Driver

Car leasing is a growing trend in urban areas, providing a hassle-free alternative to transportation needs in congested cities. Segments covered include vehicle type, lease type, and consumer preferences. Rapid adoption of car leasing activities is driven by evolving mobility needs, real-time information, and transparent pricing. Vehicle types range from commercial to passenger vehicles, with lease types offering both open and close-ended contracts. Interest rates and insurance costs are key considerations, with lease deals on the latest models increasingly popular. Subscription models, such as those offered by Reliance Jio through JioMotive, provide enhanced accessibility and convenience. However, pitfalls include changing interest rates, economic uncertainties, and reduced consumer demand due to travel restrictions. Lease contracts can be long-term, with regular payments providing affordability and comfort. Companies and individuals alike are turning to car leasing for fuel efficiency, vehicle security, and real-time insights into vehicle performance and maintenance needs. Car rental, short-term rentals, car sharing services, ride hailing applications, and subscription-based services are also part of this transformative shift. IoT adoption and smart city initiatives fuel rapid urbanization and company adoption of global mobility coverage. Team members responsible for vehicle leasing should stay informed about these trends to make informed decisions. 

In the global car leasing market, a significant number of vehicles transition from on-lease to off-lease status annually. This influx of off-lease vehicles can pose a challenge for car leasing dealers, as an increasing percentage of these vehicles may remain unused or under-utilized within their inventory. The presence of off-lease vehicles can negatively impact dealers' profits, compelling them to either reduce lease package prices or sell these vehicles as used cars at discounted rates. Lessees, who have previously leased and experienced the vehicle's quality, may choose to purchase the vehicle at the end of the lease term by paying the residual amount. This trend of selling off-lease vehicles as used cars has become a common practice among car leasing companies to mitigate the financial impact of the growing off-lease inventory. 

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Market Challenges

• Car leasing is a popular solution for urban area residents seeking hassle-free transportation alternatives in the face of parking congestion and transportation needs. The car leasing market covers various segments, including vehicle type (commercial and passenger) and lease type (open-ended and close-ended). Rapid adoption of car leasing is driven by evolving consumer preferences and the need for mobility solutions in congested cities. However, challenges persist, such as interest rates, insurance costs, and lease deals for the latest models. Pitfalls include long-term commitment and economic uncertainties, which may reduce consumer demand. City residents increasingly turn to subscription models, ride-hailing applications, and vehicle subscription services for enhanced accessibility and convenience. Major players like Reliance Jio and JioMotive are transforming the car leasing landscape with IoT adoption, real-time information, transparent pricing, and efficient communication. Vehicle security, real-time insights, and vehicle performance are key concerns, as is maintenance and comfort. Fuel efficiency and affordability remain critical factors for both businesses and individuals. Car rental, short-term rentals, long-term leases, car sharing services, and ride-sharing services are all part of the evolving car leasing landscape. Companies and individuals alike are adopting these solutions to meet their mobility needs in a rapidly urbanizing world. Global mobility coverage and team member safety are essential considerations for businesses. Car leasing is a vital component of the global mobility ecosystem, offering convenience, flexibility, and cost savings in the face of urban challenges. As consumer preferences continue to evolve and economic uncertainties persist, car leasing will remain a transformative shift in the way we access and use vehicles.
• Car leasing has been a popular business model in urban areas for over a decade. However, its penetration in semi-urban and rural markets remains limited. In these areas, purchasing a car is still the preferred choice due to a lack of understanding of leasing terminologies such as money factor, residual value, and capitalized costs. Furthermore, in emerging countries like India, China, and Indonesia, owning a car is often viewed as a status symbol, making leasing an unapproved option. Consequently, a significant portion of the potential car leasing market remains untapped. Despite these challenges, car leasing continues to be an effective alternative to car ownership for those in urban areas who prefer flexible and affordable options.

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Segment Overview

This car leasing market report extensively covers market segmentation by

1. End-user 
• 1.1 Commercial
• 1.2 Non-commercial
2. Type 
• 2.1 Open-ended
• 2.2 Close ended
3. Geography 
• 3.1 North America
• 3.2 Europe
• 3.3 APAC
• 3.4 South America
• 3.5 Middle East and Africa

1.1 Commercial- Small and medium-sized enterprises (SMEs) frequently require cars for employee transportation. Car leasing is a cost-effective alternative to buying a car for SMEs. By entering into a lease agreement with car leasing companies, SMEs enable their employees to use leased vehicles. At the end of the lease period, employees have the option to purchase the vehicle at its residual value. Car leasing offers tax benefits by calculating taxes based on monthly payments. Some leasing companies include fuel and maintenance costs in the lease. The lessee company is not responsible for selling the vehicle at the end of its service life. Car leasing also provides fleet management tools to help companies manage their transportation resources efficiently. LeasePlan Group, a leading global player in sustainable mobility, offers full-service vehicle leasing, fleet management services, and multi-mobility solutions. The commercial segment, including SMEs, large corporations, professionals, and private individuals, is expected to dominate the global car leasing market due to the financial advantages of leasing over purchasing. Car leasing does not require a down payment, making it an attractive option for businesses looking to maintain a strong financial statement. LeasePlan and ALD Automotive are driving innovation in the car leasing industry through technology-enabled services and a commitment to net zero emissions. With a presence in 44 countries and over 3.3 million managed vehicles, these companies are well-positioned to serve the growing commercial car leasing market.

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Research Analysis

Car leasing is a popular solution for urban area residents seeking hassle-free transportation alternatives in the face of parking congestion and transportation needs. This market caters to various segments, including vehicle type, affordability, and lease duration. Segments covered range from short-term rentals and car sharing services to long-term leases and subscription-based services. Vehicle leasing, also known as car leasing, offers customers the use of a vehicle for a predetermined time in exchange for regular payments. IoT adoption and smart city initiatives have further evolved leasing preferences, with the integration of ride hailing applications and vehicle subscription services. Car leasing provides an attractive alternative to traditional car ownership, offering flexibility and affordability. It allows city residents to upgrade their vehicles more frequently, aligning with their evolving transportation needs. Whether you're looking for a short-term rental or a long-term commitment, car leasing offers a range of options to suit your lifestyle.

Market Research Overview

Car leasing has emerged as a popular solution for urban area transportation needs, providing a hassle-free alternative to dealing with parking and congestion. This market caters to the evolving preferences of city residents, covering various segments such as vehicle type and lease type. Rapid adoption of car leasing activities is driven by the convenience and efficiency it offers, with the latest models and subscription-based services gaining traction. However, pitfalls like interest rates and insurance costs can be significant considerations. The market is transforming with the integration of IoT, telematics, and connectivity features. Companies like Reliance Jio and JioMotive are leading the charge, offering real-time vehicle performance insights and enhanced security. Consumer preferences for mobility needs continue to evolve, with changing interest rates and economic uncertainties impacting demand. Long-term contracts and travel restrictions have also influenced the market, with businesses and individuals turning to car rental, short-term rentals, car sharing services, ride hailing applications, and subscription-based services like Careem, Swapp, and Ride-sharing services. The market is expanding globally, with smart city initiatives and rapid urbanization driving company adoption. Per capita income and emerging markets play a significant role in expansion strategies. IoT adoption, transparent pricing, efficient communication, and real-time information are key features of the evolving car leasing landscape. Whether you're a team member looking for a lease or a customer seeking a vehicle, car leasing offers a flexible, affordable solution for your transportation needs.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• End-user
• Commercial
• Non-commercial
• Type
• Open-ended
• Close Ended
• Geography
• North America
• Europe
• APAC
• South America
• Middle East And Africa

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

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SOURCE Technavio