Leasing and rental firms are pinning hopes on second-life leasing and salary sacrifice in 2026 in an attempt to soften the impact of weaker-than-forecast demand for used electric cars.
The concerns were raised as part of the annual Industry Outlook Report by the British Vehicle Rental and Leasing Association (BVRLA), which asked 74 brokers, leasing and rental company members about their predictions for the next 12 months.
This year’s report reflected widespread pessimism, with almost two thirds (63%) predicting a weaker UK economy in 2026 as “disjointed policymaking” and “increased employment costs” continue to undermine confidence among business customers.
However, the BVRLA added that uncertainty can boost demand for rental and leasing, as both can shield customers from fluctuating residual values; the lessor takes those risks and prices them into the contract. The more money a vehicle loses while it’s with a customer, the pricier its monthly rentals.
BVRLA members are already absorbing “heavy losses” as 2022’s surge in new EV registrations (largely fuelled by demand from tax-incentivised business fleets) is remarketed with steeper depreciation than had been priced into their contracts three years ago.
That trend is expected to continue in 2026. Whereas 77% predicted values for petrol, diesel and hybrid cars will be stable or grow, 64% are expecting EVs to fall even further.
Rental companies showed even higher concerns, with the report claiming high costs and low customer demand for EVs mean “the vast majority” of firms would avoid them altogether if the government’s ZEV mandate wasn’t influencing supply.
The BVRLA said its members want to see grants for used electric cars and positive narratives around battery health and charging infrastructure to stimulate demand for the still-growing supply of vehicles.
Many also said they were refocusing away from competing for new customers and opting to re-lease used vehicles or being strategic with remarketing to stabilise profits.
BVRLA members had a combined fleet of 33,131 used cars on business contract hire (BCH) contracts in the secons quarter of 2025, up 174% year on year.
Salary sacrifice schemes have become a priority. These enable drivers to use their pre-tax salary to lease a car through their employer, often at discounted rates. If that vehicle emits 75g/km CO2 or less, they’re taxed on it as a company car instead of the much higher value of the monthly rentals, so they pay less tax.
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"positive narratives around battery health and charging infrastructure to stimulate demand for the still-growing supply of vehicles" [sic]. What does it mean "positive narrarive"? Could they also be untrue?
The "negative narrative" around battery health is getting a very tired argument now. Johnny Smith is running a Tesla with 300k on the clock that still has over 90% battery efficiency Why do you think most manufacturers offer 8 year warranties? They back the reliability of their technology.
This is a very insightful overview. It’s interesting to see how leasing firms are pivoting to second-life deals and salary sacrifice schemes to manage EV depreciation. Highlighting the challenges of residual values and patchy demand really explains why companies are refocusing on used vehicles. I also appreciate the mention of grants and positive narratives around battery health those could make a big difference in boosting customer confidence in EVs.