The UK van leasing market has recorded a sharp downturn, with the BVRLA reporting a third consecutive quarterly decline in light commercial vehicle volumes as fleets delay replacing ageing vehicles. According to the organisation’s latest Leasing Outlook, the number of vans on member fleets dropped by almost 11% year-on-year, falling to just 461,673 vehicles at the end of 2024.

This marks a significant reversal from the longer-term trend that had seen LCVs play an increasingly prominent role in leasing company portfolios. While the car lease fleet continues to grow — up nearly 5% — van volumes are slipping as fleet operators adopt a wait-and-see approach to replacements.

The reason for the retreat is clear: the cost of acquiring new vans has risen substantially, and customers are choosing to keep hold of older vehicles rather than absorb the steep increase in lease rentals. Supply is no longer the issue it once was. With good availability across the market, the decline in new van leases is now being driven entirely by weak demand.

Leasing companies say economic uncertainty is making operators more cautious, with many customers choosing to extend their existing contracts rather than invest in new vehicles. The impact of inflation, and rising emplyment costs such as employer National Insurance contribution increases, is also being felt, prompting some businesses to reduce the overall size of their fleets to avoid carrying underutilised or non-essential assets.

While the availability of diesel vans has improved since the Covid era, the financial burden of switching to electric alternatives remains a significant deterrent. The market for electric vans continues to flatline, falling well short of the government’s ZEV mandate. As a result, fleets are increasingly relying on ageing diesel models and pushing them well beyond their original holding periods.

According to the report, contract extensions have now become standard practice across much of the market. Leasing firms are facilitating these deals where possible, particularly for customers seeking to avoid the sharp jump in monthly costs that typically comes with a new contract. For electric vehicles, contract extensions are also a strategy to delay exposure to potential losses at disposal, with residual values still proving volatile.

BVRLA members also report that some operators are ‘rightsizing’ their fleets in response to the economic climate, either by trimming back on spare capacity or redeploying vehicles to areas where they can be better utilised. The aim is to minimise waste and avoid tying up capital in vehicles that aren’t working hard enough to justify their cost.

Despite the decline in van volumes, there is little evidence of a crisis. Instead, the sector appears to be in a holding pattern, with cautious customers carefully weighing their next moves. The hope among leasing providers is that improving economic conditions and a return to pricing stability will tempt operators back into the market later this year.

However, with lingering concerns over vehicle affordability and ongoing uncertainty surrounding the transition to electric LCVs, many believe van leasing volumes will remain subdued well into 2025.

Phil Huff
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