Car Leasing Market to Grow by USD 55.3 Billion from 2025-2029, Rising Technological Obsolescence Boosting Revenue, AI Impact on Market Trends - Technavio

NEW YORK, Feb. 10, 2025 /PRNewswire/ -- Report on how AI is redefining market landscape - The global car leasing market size is estimated to grow by USD 55.3 billion from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of  8.7%  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 passenger vehicles and commercial vehicles. Lease types include open-ended and close-ended contracts. Vehicle types range from the latest models to fuel-efficient options. Rapid adoption is driven by evolving preferences of city residents for convenience and mobility needs. Pitfalls include interest rates and insurance costs, but lease deals offer affordability. Subscription models and IoT adoption are transforming car leasing activities. Companies and individuals alike are adopting car leasing due to changing interest rates and economic uncertainties. Real-time information, transparent pricing, and efficient communication are key features. Vehicle security, maintenance needs, comfort, and fuel efficiency are consumer preferences. Car rental, short-term rentals, long-term leases, car sharing services, ride hailing applications, and subscription-based services are all part of the car leasing market. Businesses like Reliance Jio, through JioMotive, are entering the market with vehicle subscription services. CAREEM, Swapp, and ride-sharing services are also major players. The market is expanding in emerging markets due to increasing per capita income and smart city initiatives. Companies are adopting IoT and telematics for enhanced accessibility and real-time insights into vehicle performance. 

In the global car leasing market, a significant number of vehicles return as off-lease cars each year. Car leasing companies face the challenge of managing an expanding inventory of these vehicles, which may remain idle or underutilized in their stockpile. The presence of off-lease cars can negatively impact earnings, as dealers may be compelled to lower lease package prices or sell these cars as used vehicles at discounted rates to remain competitive. Lessees, having experienced the vehicle's quality during the lease term, often choose to purchase it by paying the residual amount. This trend increases the supply of used off-lease cars, putting pressure on dealers' profits. 

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 Market Challenges

• Car leasing is a popular alternative for urban area residents with transportation needs, facing parking challenges and traffic congestion. Leasing offers a hassle-free solution with various segments covered, including vehicle type and lease type. Rapid adoption of car leasing activities is seen in both businesses and individuals, driven by evolving preferences and mobility needs. However, pitfalls such as interest rates and insurance costs can be significant. Lease deals on the latest models are increasingly popular, with subscription models gaining traction due to changing consumer preferences. Vehicle security, real-time insights, and vehicle performance are key features sought after by city residents. Maintenance needs and comfort are also important considerations. Car rental, short-term rentals, long-term leases, car sharing services, ride hailing applications, and subscription-based services are all part of the car leasing market. Companies like Reliance Jio and JioMotive are leveraging IoT adoption for vehicle security and connectivity features. Long-term contracts, travel restrictions, and economic uncertainties can impact car leasing activities. Transparent pricing, efficient communication, and telematics are essential for a seamless leasing experience. Companies are adopting IoT and smart city initiatives to expand their global mobility coverage and meet the needs of their team members. The transformation of the car leasing market includes open-ended and close-ended leases, commercial vehicles, and the passenger vehicle category. Per capita income and emerging markets play a role in expansion strategies. The market is expected to continue evolving with the changing landscape of transportation needs.
• 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 the confusion surrounding leasing terminologies such as money factor, residual value, and capitalized costs. Furthermore, in emerging countries like India, China, and Indonesia, where cars are considered status symbols, leasing is often disapproved. These factors limit the growth potential of the car leasing market, particularly in underpenetrated regions. Despite its benefits, such as lower upfront costs and flexibility, car leasing has yet to gain widespread acceptance beyond urban areas.

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Segment Overview 

This car leasing market report extensively covers market segmentation by  

• End-user
• Commercial
• Non-commercial
• Type
• Open-ended
• Close Ended
• Geography
• North America
• Europe
• APAC
• South America
• 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 purchasing a car for SMEs. Through lease agreements, SMEs allow their employees to use leased cars, with the option to buy the vehicles at their residual value at lease's end. Car leasing offers tax benefits by calculating taxes based on monthly payments. Some leasing companies cover fuel and maintenance costs. Lease agreements do not require lessee companies to handle vehicle ownership documentation. Car leasing companies provide fleet management tools and digital monitoring services. LeasePlan Group, a leading car leasing company, offers full-service leasing, fleet management, and multi-mobility solutions. With no down payment required, car leasing allows for lower debts and higher cash-in-hand, making it appealing to investors. Commercial customers, including SMEs, large corporations, and professionals, are the primary market segment for car leasing. LeasePlan Group, along with ALD Automotive, is driving the car leasing industry's digital transformation and sustainability through innovation and technology. With a presence in 44 countries and managing 3.3 million vehicles, LeasePlan is a global leader in sustainable mobility. The growing commercial use of car leasing is expected to fuel the global car leasing market's growth in the commercial customers segment.

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Research Analysis

Car leasing is a popular option for urban area residents seeking hassle-free transportation solutions in the face of parking congestion and transportation needs. This market caters to various segments, including vehicle type, affordability, and lease duration. Short-term car rentals and long-term leases are common choices, with car sharing services, ride hailing applications, and subscription-based services also gaining traction. IoT adoption and smart city initiatives are driving the evolution of car leasing, offering customers more flexibility and convenience. Whether you're looking for a predetermined time contract or regular payments for a vehicle, car leasing provides an attractive alternative to traditional car ownership. Vehicle Subscription Services are becoming increasingly popular, offering customers the ability to switch vehicles as their preferences and needs change.

Market Research Overview

Car leasing is a popular solution for urban area residents looking for hassle-free transportation needs in the face of parking congestion and transportation needs. This market caters to both individuals and businesses, offering various segments covered such as vehicle type and lease type. Rapid adoption of car leasing activities is driven by evolving preferences for mobility needs and convenience. Vehicle types range from commercial vehicles to passenger vehicles, with lease types including open-ended and close-ended contracts. Lease deals on the latest models are increasingly popular, with subscription models and IoT adoption transforming the industry. Consumer preferences for comfort, fuel efficiency, and affordability are key considerations. Pitfalls include interest rates, insurance costs, and long-term commitments. Economic uncertainties and travel restrictions can impact consumer demand. Companies like Reliance Jio and JioMotive are leveraging technology with mobile apps, real-time information, transparent pricing, and telematics for enhanced accessibility and vehicle security. Car rental, short-term rentals, long-term leases, car sharing services, ride hailing applications, and subscription-based services are all part of the car leasing landscape. Businesses and individuals alike benefit from the flexibility and convenience of car leasing, with companies adopting global mobility coverage as part of their expansion strategies. The market is experiencing a transformative shift towards IoT adoption, smart city initiatives, and rapid urbanization.

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 Infiniti Research, Inc.