Vehicle leasing and rental experienced significant growth during the pandemic as the influx of new vehicles ceased worldwide. Even after this period, supply chain disruptions and semiconductor shortages hindered the automotive industry. Now, with fewer new passenger cars and light vehicles hitting the roads, both corporations and individuals are turning to leased fleets.
As the aftereffects of the pandemic are diminishing, the growth drivers for the industry are shifting. Companies are now finding it cost-effective and convenient to meet their mobility needs through rented fleets. This approach allows them to outsource fleet maintenance, reduce the residual risk associated with owning vehicles, and shift their focus to improving core products and services. Consequently, the ecosystem is growing and becoming structured and regulated, with technology providers, aftermarket suppliers, and fleet management and telematics companies entering the fray — enabling more flexible, dynamic, and tech-assisted leasing solutions.
Click here to access our latest analysis revealing lucrative growth opportunities emerging in the leasing and rental industry.
The renewed long-term prospects for vehicle leasing are igniting a competitive race among fleet providers. These companies are now offering customer-friendly and flexible solutions and incorporating disruptive technologies such as fleet telematics, vehicle connectivity, and digital platforms into their services. And the best part? It only gets more lucrative from here.
In this dynamic leasing and rental environment, which growth opportunities are you leveraging for competitive success?
WHAT ARE THE KEY OPPORTUNITIES FUELLING GROWTH?
Used-Car Leasing to Address Vehicle Supply Shortages
Many cars remained underused during quarantine and the subsequent work-from-home era. This resulted in a surplus of well-maintained used vehicles, presenting a valuable opportunity for small businesses and individuals to reduce mobility costs through used car leasing. This approach has evolved, with companies now offering streamlined monthly billing rates and flexible models such as short-term and subscription-based leasing. Additionally, used electric vehicles (EVs) with extended warranties on batteries and motors are revealing significant prospects for long-term leasing. Developing automotive regions, particularly Brazil, Russia, Turkey, and Poland, are already experiencing competitive intensity in the used car leasing ecosystem.
A Glance at The Growth Landscape
- Growth Surge: As per our latest estimate, used car leasing grew by 15.3% year-on-year, reaching 2,207,080 units.
- Attractive Plans and Packages: Leasing companies are offering compelling used car leasing deals, with operational leasing contracts dominating the industry at a 58.0% share.
To explore more growth opportunities in the used car leasing domain, click here to check out our latest growth analysis.
Is your team actively developing a growth strategy focused on leveraging used car leasing for competitive success?
Usage-Based Insurance in Leasing and Rental Fleets
Advancements in automotive technology are paving the way for growth opportunities in usage-based insurance (UBI). Insurance companies, original equipment manufacturers (OEMs), and leasing and rental fleet providers are collaborating to collect insurance data, implement safety measures, and optimize operational efficiencies. UBI is revolutionizing customer convenience by democratizing insurance services and standardizing rates, leading to minimal customer attrition and improved total cost of ownership (TCO) for service providers.
Growth opportunities in the adoption of this solution in car leasing include the use of accurate data and big data analytics for better risk assessment and tailored insurance solutions. Furthermore, leveraging technologies such as blockchain and artificial intelligence enhances UBI’s security and transparency.
A Glance at The Growth Landscape
- Europe’s UBI Revolution: The solution has been prevalent for over a decade in European countries such as France, Germany, Italy, Spain, and the United Kingdom. Recent increased awareness has led to significant penetration, with Italy recording a 10.5% rate and the United Kingdom witnessing a 9.3% rate in UBI volumes in 2023.
- Connected Services: Leading businesses are rapidly capitalizing on connected services for fleet management, offering UBI and fleet management solutions. The corporate-owned fleet segment, especially, is seeing robust penetration due to heightened concerns about fleet and driver safety.
Source: Frost & Sullivan’s Growth Opportunities in Usage-Based Insurance for Leased Fleets
To learn more about the growth opportunities emerging in the world of UBI for leasing and rental fleets, click here to check out our latest growth analysis.
Is your organization well positioned to capitalize on the emerging growth opportunities?
About Frost & Sullivan:
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