LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global car leasing market to grow at a CAGR of close to 13% over the forecast period, according to their latest report.
The research study by Technavio on the global car leasing market for 2017-2021 provides a detailed industry analysis based on the end-users (commercial and non-commercial customers) and geography (APAC, EMEA, and the Americas).
|Commercial establishments accounted for a majority 85% of the global car leasing market in 2016. Leasing cars are beneficial to commercial entities in the form of tax savings with monthly payments, management of fuel charges incurred up to a pre-determined limit, and also the cost of maintenance. Cash that would have otherwise been used for fleet purchases can then be used for the growth of the business.|
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Technavio analysts highlight the following three factors that are contributing to the growth of the global car leasing market:
- Easy replacement of cars and cost-saving advantages
- Availability of an effective and hassle-free means of self-transportation
- Increased demand for new and luxury cars
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Easy replacement of cars and cost-saving advantages
Most car purchasers use a specific car model for a few years. However, with the constant innovations in the automobile industry, consumers prefer to stay updated with new models that have improved safety features, fuel economy, and navigation systems. Leasing provides the opportunity to the lessee, to terminate the lease whenever required and to obtain a model that is equipped with the latest technologies.
“Businesses can have access to a fleet of cars with hassle-free maintenance by the lessor of car leasing services. The reduction in fleet costs has also made it an easy and cost-effective mode for the firms to provide vehicles to their employees,” says Amey Vikram, a lead analyst at Technavio for automotive services research.
Availability of an effective and hassle-free means of self-transportation
For small- and medium-sized enterprises (SMEs), the requirement of cars for the mobility of the employees becomes an inevitable expenditure and requires a large outflow of the capital. Car leasing acts an alternative to this and offers various advantages that businesses can benefit from.
The higher the number of vehicles a company owns, the higher will be the maintenance cost. However, in the case of leasing, the vehicle manufacturer's warranty typically covers the entire lease period. This ensures that any issues are taken care of without any additional expenses. In addition, road tax is also covered by the leasing company. SMEs avail self-transportation in a convenient and hassle-free manner would drive the global car leasing market during the forecast period.
Increased demand for new and luxury cars
There is increased demand for new and luxury cars in the market. Rising disposable income is enabling individuals to spend more on leasing luxury cars. In 2016, more than half of the luxury cars in the US were registered by leasing companies, which is indicative of the increase in demand for luxury cars, especially small SUVs.
“Leasing cars is emerging as the most feasible way to own an aspired luxury car with least commitment and most importantly less upfront cash. The main factor which is driving the leasing market in the luxury car segment is the increased interest and preference of the millennials,” says Amey.
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