As Q2 gets underway, Director Spencer Blake discusses how the early months of this year have presented a landscape that's both volatile and historically unique...
Unprecedented market volatility
In over 21 years of leading Xcite's parent company, Wessex Fleet Solutions, I've never seen a market as volatile as the one we've experienced over the past 3 months. While we've seen a marginal increase in new car registrations (approximately 50,000 to 100,000 units), this modest growth masks a seismic shift in the industry.
The long-standing legacy manufacturers are facing a scenario I haven't witnessed in my 2 decades in business: a rapid erosion of market share. The marginal nature of the registration growth means that for every new Chinese vehicle hitting the road, an incumbent brand is likely losing a foothold.
The rise of the new powerhouses: BYD, Chery, Geely, and Changan
The momentum from 2025 hasn't just continued; it's accelerated. BYD and Chery in particular, are performing exceptionally well with new models coming to market almost monthly. It’s interesting that the new brands aren't just launching new models but rapidly expanding their dealer network to be able to provide customers a full aftersales service across the UK. There's also been a shift in customer perception and demand, and our customers across all channels are now enquiring about the brands rather than it being deal or price led.
Success in the AR channel
One of the most promising developments this quarter has been the performance of our Appointed Representatives (ARs). Q1 2026 will be a record order take across our ARs. We're incredibly proud of the partnerships we have established, and I personally get enjoyment out of seeing them succeed. The record numbers significantly validates our decision to expand this partnership model through 2025. This decentralised approach is allowing us to capture volume even in a fluctuating market, proving that local expertise combined with Wessex Fleet’s central infrastructure is a winning formula.
UK leasing industry: Q1 2026 trends
The broader UK leasing industry is currently navigating several headwinds:
- The ZEV mandate pressure: As we move further into 2026, the 33% Zero Emission Vehicle target is putting immense pressure on manufacturers. This is driving the aggressive pricing we predicted last quarter, particularly from Chinese brands who are unencumbered by legacy ICE (Internal Combustion Engine) production.
- Residual value sensitivity: While we noted signs of stabilisation in late 2025, the sheer volume of new entrants is keeping lease companies cautious. However, our partnerships allow us to remain competitive where others may be forced to hike rates to cover potential RV losses on older European stock.
- Inventory vs. demand: We're seeing a 2-speed market. While some traditional brands struggle with supply or pricing, the likes of Geely and BYD have healthy inventories ready for immediate delivery, a massive advantage for the retail lease customer that wants their vehicle quickly.
Looking ahead to Q2
2026 is no longer about just preparing for change; the change is here. As we move into Q2 this change is no longer just about the players in the market, it is the market itself. We're already seeing lease rates rise due to cost of funds increases; we're very much hoping that a protracted conflict in the gulf won’t feed into increased prices of the vehicles themselves. The change and uncertainty has intensified our focus for the next 3 months.
Operating across multiple channels has always allowed us to take advantage of opportunities and we're looking to capitalise on our AR momentum, solidify our brand-specific strategy within the AA channel, as well as continuing to focus efforts on Xcite, our direct channel, and Wessex Fleet, the corporate side of the business.
Spencer's top leasing tips for Q2 2026
The market may be volatile, but for a broker with the right funding partners and a diverse route to market, that volatility creates the exact opportunities to drive cost savings for our customers across all channels, delivering better value than ever, so look out for some unexpected deals as a result.