Over the past five years, the UK car leasing market has witnessed a notable downward trend. The causes behind this shift are multifaceted—ranging from economic uncertainty post-Brexit and supply chain disruptions to changing consumer behaviour as people move towards more flexible finance solutions. However, while traditional car leasing has seen a decline, this is not the time for businesses in the sector to retreat into “doom and gloom.” Emerging trends such as Salary Sacrifice schemes and a growing interest in Electric Vehicle (EV) leasing present new opportunities for growth if businesses are agile enough to seize them.
As we look ahead, understanding these shifts—and how they impact the automotive leasing landscape—will be vital to remaining competitive in an industry undergoing rapid transformation.
The car leasing downturn: What’s driving the shift?
The decline in traditional car leasing can be attributed to several key factors:
- Economic Uncertainty and Inflation: Over the past five years, fluctuating exchange rates, rising inflation, increased interest rates, and general economic uncertainty have made consumers wary of long-term financial commitments. With higher financing costs and concerns about future stability, many are reluctant to lease vehicles, favouring financial flexibility in an unpredictable economy.
- Changing Consumer Preferences: The rise of the “subscription economy” has changed how people think about car ownership. Consumers increasingly prefer flexible, on-demand mobility solutions that allow them to switch between vehicles or opt out without long-term commitments.
- Post-COVID-19 Impact: During the pandemic, remote working reduced vehicle usage, causing many consumers to rethink the necessity of car leases. While the automotive market has rebounded, leasing has not returned to pre-pandemic levels, as some consumers now prioritise short-term rental options or more cost-effective car finance alternatives.
Growth in salary sacrifice schemes
Despite the downturn in traditional car leasing, we’ve seen a spike in Salary Sacrifice schemes, particularly for company cars. These schemes offer an attractive alternative for employees looking to get into a vehicle without the upfront costs or the financial burden of traditional leasing.
- Tax Benefits: Salary Sacrifice offers significant tax advantages for businesses, particularly for electric vehicles (EVs), thanks to lower Benefit-in-Kind (BiK) rates. Employees can drive new, greener vehicles at a lower cost, which has made Salary Sacrifice a popular option for companies prioritising sustainability in their benefits packages.
- Accessibility: For individuals who may have found leasing difficult due to credit constraints, Salary Sacrifice presents a more accessible option. This not only increases vehicle accessibility for employees but also positions businesses as forward-thinking employers.
The rise of EV leasing: A game-changer
Another key trend bolstering the leasing market is the growing demand for electric vehicles (EVs). With the UK government’s 2030 ban on the sale of new petrol and diesel cars looming, the shift to greener vehicles is becoming more pronounced.
- Government Incentives: Grants, reduced road tax, and subsidies for electric vehicles are further encouraging businesses and individuals to lease EVs as an eco-friendly option.
- EV-Specific Lease Deals: As demand rises, leasing companies are tailoring offers specifically for EVs. These deals often come with charging incentives, free home chargers, or reduced lease rates to encourage adoption, helping to offset higher upfront costs associated with EVs.
EV leasing represents a key growth area in the market, particularly as consumers look to make more environmentally conscious choices, spurred by government policy and shifting social attitudes towards sustainability.
Tips for navigating through this period
Paid marketing strategies will be crucial in navigating and adapting to these market shifts. Through the lens of paid marketing channels, here are some key considerations businesses should focus on as they move into 2025.
With competitors all vying for the same business, an increase in Cost-Per-Click (CPC) across leasing terms is inevitable. However, businesses can still maintain a competitive edge by adopting a more strategic approach. Here’s how focusing on key areas can help drive better performance in a more challenging market:
1. Utilising first-party data
In a world where privacy regulations are tightening, and third-party cookies are disappearing, first-party data has become a valuable asset. Businesses that can effectively gather, organise, and utilise their own customer data will have a distinct advantage. By leveraging this data, companies can build more precise audience segments, ensuring ads are shown to the most relevant prospects.
First-party data enables deeper insights into user behaviour, preferences, and past interactions. This allows for more personalised messaging, which can drive engagement and conversions. Additionally, the use of Customer Match in Google Ads or similar platforms allows businesses to reach existing customers with bespoke offers or upsell opportunities—driving better performance while reducing the cost of acquiring new customers.
2. Understanding key audience groups and refining messaging
To stand out in a crowded marketplace, businesses must have a clear understanding of their target audience. Whether focusing on salary sacrifice schemes, EV leasing, or more traditional leasing products, it’s critical to segment and target the right audience with tailored messages that address their specific needs and pain points.
For example, promoting EV leasing to environmentally conscious businesses requires a different approach than targeting individuals looking for affordable family vehicles. By refining messaging based on these audience insights, businesses can ensure that their ads resonate more deeply, improving click-through rates (CTR) and conversion rates, even in the face of rising CPCs.
3. Maximising data efficiency to leverage automation and AI tools
When used effectively, automation and AI tools can be powerful levers for improving campaign efficiency. With the help of first-party data, businesses can feed valuable insights into Google’s automated bidding systems, allowing the AI to optimise campaigns based on real-time user behaviour and predicted performance.
For instance, automated bidding strategies like Target CPA or Target ROAS can help businesses optimise their spend towards conversions, ensuring that each click delivers more value. Additionally, leveraging AI tools to dynamically adjust ad creative or target audiences based on user signals ensures that businesses can remain agile in a fast-changing market.
4. Understanding the importance of brand awareness
While many businesses focus their PPC efforts on capturing leads at the bottom of the funnel, it’s essential not to overlook the role of brand awareness in overall performance. A strong brand presence can significantly reduce dependency on expensive generic keywords. Customers who are familiar with your brand are more likely to search for you directly, bypassing competitive and high-cost search terms.
Investing in brand-building strategies such as display advertising, video campaigns, and social media engagement can elevate brand recognition. This reduces the need to consistently fight for visibility through costly generic terms like “car leasing” or “EV lease deals.” Instead, a recognisable and trusted brand will benefit from more organic traffic and direct searches, making paid campaigns more cost-effective.
5. Creating strategies that reduce over-reliance on generic keywords
In a competitive market where generic search terms can drive CPCs through the roof, businesses need to build long-term strategies that reduce over-reliance on these terms. By diversifying traffic sources, such as focusing on more specific, lower-competition long-tail keywords and developing content that engages customers earlier in the decision-making process, businesses can reduce the need to outbid competitors on the most expensive terms continually.
Combining this approach with efforts to improve overall customer experience and website conversion rates ensures that businesses attract traffic and convert visitors into leads more efficiently, even when bidding on lower-cost keywords.
Prominent businesses already adapting
Several businesses are already leading the charge in this shift. Octopus Electric Vehicles, for example, has positioned itself as a major player in EV Salary Sacrifice, offering attractive packages to businesses keen on reducing their carbon footprint. Similarly, Tusker is making waves in the salary sacrifice market, offering competitive EV leasing packages with integrated charging solutions and making adoption seamless for businesses and employees.
These companies exemplify the agility needed to remain competitive in industry change. Their success is built on recognising and capitalising on emerging trends while adapting their marketing efforts—especially PPC strategies—to align with evolving consumer behaviour.
The UK car leasing market may be facing a downward trend, but it’s not all doom and gloom. Instead, it offers an opportunity for businesses willing to evolve. Salary Sacrifice and EV leasing are just two examples of how the market is shifting, creating new avenues for growth. By embracing these changes and leveraging PPC to engage new audiences, businesses can not only survive but thrive in this changing landscape.
Staying ahead in 2025 and beyond will require a balance of agility, innovation, and data-driven marketing—qualities that will keep businesses competitive and adaptable to the new norms of car finance.
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