The deterioration of the UK economy is expected to offset causes for optimism as the rental and leasing sectors prepare to face mixed fortunes in 2026. While the sector stands in good stead to take advantage of emerging opportunities for growth, it is preparing to support customers through developing financial headwinds.
The findings feature in the BVRLA’s 2026 Industry Outlook Report, which outlines how 63% of rental and leasing businesses expect economic conditions to worsen in 2026. Companies also remain cautious on future vehicle values, driven by rampant depreciation of electric cars and vans. 64% expect this decline in EV residual values to continue, putting further pressure on remarketing performance and causing rates on new vehicles to rise as a way to mitigate sustained, deep drops.
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Despite these concerns, the Outlook predicts positivity in parts of the rental and leasing sectors. Salary sacrifice continues to climb, with nine in ten leasing companies (90%) forecasting growth due in part to long-term support from targeted government incentives. The product has cemented itself as a critical driver of fleet electrification with employers looking for cost-efficient ways to expand their mobility offer and strengthen benefits packages.
The report also highlights pockets of confidence among rental operators. More than a third (38%) of rental companies expect demand for LCV hire to grow in 2026, fuelled by last-mile delivery activity and the ongoing shift towards outsourced fleet flexibility. While many sectors remain under strain, vehicle rental is expected to deliver short-term mobility as fleets hold off making long-term financial commitments while macroeconomic uncertainty remains.
For the electric car market, a major shift is underway and set to gather more momentum in 2026. Lower-cost EVs – priced under £37,000 – are arriving in volume, with 70% of firms expecting an increase in supply next year. In tandem with this uptick, 43% of leasing companies anticipate Chinese brands to grow their collective share. The growing mix of brands and drivetrains is helping diversify fleet options but adding complexity to whole-life cost modelling too.
Toby Poston, BVRLA Chief Executive, said: “Hardened by a series of shocks, our sector is more resilient than ever but desperately in search of some stability and certainty. The recent Budget delivered little of either.
“The rapid rate of decarbonisation being enforced through the ZEV Mandate is hurting everyone, with imbalanced incentives, patchy demand, plummeting residual values and a misguided new pay-per-mile tax clouding the horizon. Every positive step the Government takes seems to be undermined by a bad decision elsewhere. And yet, industry leaders remain optimistic. History shows our sector can advance in the face of intense headwinds. Based on the findings of this report, we should plan for more of the same in 2026.”
The 2026 Industry Outlook Report provides an in-depth view of business sentiment and emerging market trends across the UK’s rental, leasing, and mobility services sectors.
