Who is the target market for luxury car leasing?

What is the rental market?

The car leasing market is an alternative way for businesses and individuals to access new cars even if they cannot afford them.

Leasing a car is often seen as a more affordable option than buying a car. This is mainly because you can choose the car you want to drive within a reasonable range and the cost is set as a monthly fee.

At the end of the lease (usually 3 years, depending on the age of the car), if the contract is renewed, the car will be replaced with a new one.

Is it a stable market?

Unlike owning a car, leasing companies take into account the depreciation of the car. Therefore, there is no future risk. This is attractive to business owners because it not only allows them to accurately predict their tax obligations, but also has economies of scale that can be obtained from a large lease car fleet.

It is widely predicted in the automotive industry that car leasing will become the norm within the next 10 to 15 years, and the majority of us will avoid the cost of new cars to follow this trend.

Market trend

Following this forecast, past market trends indicate that the UK used car market is slowing down. The used car market fell only 5.9% in the first half of 2010, while new car sales fell 26.6% year-on-year.

Over the last decade, the UK used car market has grown by a total of 7%. This is despite the negative media attention and inconsistent promotion by automakers.

According to these figures, the stable demand for used cars helped the franchise dealer network survive the storm. This was before the long-awaited scrappage program came to the fore.

According to research firm Trend Tracker, about four used cars were sold for each new car in 2010.

Impact on the leasing market

More than half of new car demand is from companies. As a result, this change in purchasing behavior has led to a change in tack from the leasing company itself. It is now encouraged to hold a car after the three-year contract expires. This not only helps counter the decline in the number of available contracts, but also helps indent the potential loss resulting from the disposal of the car.

So who is the target market?

Originally in the realm of businesses and large corporations, it is now becoming more and more common for individuals to choose a lease car. In the same example, the number of business clients has not declined, but rather there has been a shift to a more economical and environmentally friendly model.