Revitalizing the Pre-owned Automotive Industry

In the race towards a zero-emission transport system, leasing companies wield significant influence, accounting for over half of new car registrations in the EU. However, a recent analysis suggests that these companies are not leading the way in adopting battery electric vehicles (BEVs).

The affordability and accessibility of electric cars in the used car market are pivotal for a socially equitable shift to electromobility. With nearly 80% of people purchasing their cars from the used car market, it plays a crucial role in making BEVs more accessible to a broader population.

A faster electrification of the leasing sector could result in an additional 18 million BEVs entering the used car market by 2035. Transitioning from internal combustion engine (ICE) cars to BEVs is deemed one of the most effective measures to reduce EU emissions, as road transport is a major contributor to EU emissions.

The briefing recommends leasing companies to commit to phasing out fossil fuel cars by 2028. Several leasing companies in the EU have announced plans to fully transition their fleets from fossil-fuel vehicles to electric vehicles by 2028, reflecting wider industry commitments to electrification and sustainability.

Policymakers are encouraged to reform company car taxation, increasing taxes for fossil cars and plug-in hybrids, and proposing binding electrification targets for corporate fleets, reaching 100% by 2030 at the latest. Such measures could unlock the full potential of leasing companies in accelerating the electrification of the used car market.

The European Commission is set to unveil a 2040 climate target to intensify emission reductions. The used car market, with its affordability and accessibility, contributes significantly to economic growth, environmental sustainability, and social accessibility, particularly for low- and middle-income families. As such, the used car market deserves greater attention in environmental analyses.

However, leasing companies, often affiliated with banks or automakers, are not acting as the green leaders they claim to be. In some cases, leasing companies promote misleading green solutions, and none of the top leasing companies has committed to phasing out fossil fuel cars, despite their substantial profits. Instead of driving the transition to electric vehicles, leasing companies are observed to follow market trends.

The affordability of used BEVs is a key factor in making electric cars accessible to middle-income households. Eight million of these additional used BEVs would be priced below 10,000 euros, making them more affordable for a wider audience.

As the EU prepares to intensify emission reductions, the electrification of the leasing sector and the used car market could play a significant role in achieving these goals. National and EU legislatures are discussing binding electrification targets for corporate fleets by 2030, including incentives such as accelerated depreciation and requirements for charging infrastructure, aiming to promote rapid adoption of electric vehicles in corporate and public fleets.