Car leasing in India is gaining traction beyond large corporates, with small and medium enterprises (SMEs) in tier-2 and tier-3 cities increasingly leasing vehicles for employees engaged in sales and service functions. However, the market remains at an early stage of development compared with developed economies and markets such as Thailand.
“The car leasing industry, over the last couple of years, has seen a lot of development in terms of many players coming in, people becoming more interested to lease and also OEMs wanting to give their customers benefits of leasing. Additionally, more corporates are bringing in car leasing policies to give some additional benefit for their employees,” said Mr. Suvajit Karmakar, Country Managing Director, India and Asia Sub-Regional Director at Ayvens, one of the largest car leasing companies in India, currently operates a fleet of more than 50,000 vehicles.
According to him, demand for leased vehicles has also increased as companies place greater emphasis on employee health and safety, particularly for field-based roles following the Covid-19 pandemic. “So this is where we are seeing an opportunity for growth,” he said.
Leasing as cost-effective alternative
The company believes leasing can offer businesses a more economical alternative to reimbursing employees for frequent use of ride-hailing services.
“If you don’t give a car, the staff will take an Uber or an Ola at ₹27-₹30 per km,” Mr. Karmakar said.
An employee travelling around 1,500 km a month could incur travel expenses of ₹40,000-₹50,000, he said. In comparison, a vehicle could be leased for around ₹15,000-₹20,000 a month, with fuel costs adding another ₹10,000-₹15,000.
“So there is a minimum 7 to 10% saving. Besides, we take care of the maintenance,” he said.
The shift also reflects a broader change in corporate thinking, with companies becoming more cautious about deploying capital towards depreciating assets.
“Post the global financial crisis Indian companies have become very conscious about where we put our money and staying away from putting money in depreciating assets. So, that has really helped,” Mr. Karmakar said.
India’s leasing penetration remains low
Mr. Karmakar estimates that the total leased vehicle fleet across all players in India stands at around 1.3 lakh units, with the segment growing at an annual rate of 5-10%.
“Our ambition is to grow faster. The market offers lots of opportunity for growth. Our target is to cross more than one lakh vehicles by 2030. We want to more than double the fleet,” he said.
To drive this growth, the company is focusing on sales and service teams, while also expanding its reach among SMEs, private business owners and professionals such as doctors and architects.
For such customers, leasing allows the monthly rental to be treated as an operating expense, rather than requiring upfront investment in a depreciating asset.
“For them, the cost of the car is just expenses out. Monthly lease, rental can be expensed in P&L. So, it’s a very good, acceptable product,” Mr. Karmakar said.
Demand for alternative-powertrain vehicles rises
Ayvens is also increasing its purchases of hybrid and CNG vehicles as demand for more fuel-efficient mobility solutions grows. During the first half of the year, 27% of the company’s new vehicle purchases comprised hybrid, CNG and electric vehicles.
Despite the recent growth, India’s car leasing market remains small relative to the overall passenger vehicle market as he estimates that leasing accounts for less than 2% of India’s passenger vehicle market.
In Europe, around 35% of new car registrations are corporate registrations, of which approximately 60% are leased. This translates to roughly 23-24% of new vehicle registrations being leased, according to him.
“In India, it is still in the infancy stage. But corporates are realising it and they are rewarding the field staff. And this is happening across pan-India,” Mr. Karmakar said.
The company also sees Thailand as an example of how corporate vehicle leasing can become deeply embedded in employee mobility. Despite being a smaller market, Thailand has widespread use of company-provided vehicles for sales, service and other field-based roles.
Published – September 12, 2026 07:09 pm IST
