The lease industry is gearing up to buy more than a million cars this year as expectations grow that fleets will replace cars that have been on extended contracts since the end of 2008.

“There will be a lot of activity in the leasing sector in the first half of 2010, with some major contract wins and losses,” said John Lewis chief executive of the BVRLA.

“I expect fleet sales will be higher, above the million mark. This rise will come despite a similar increase in both vehicle prices and lead-times.”

Car makers are also optimistic that fleet sales will be strong this year.

“We expect the total fleet market to be slightly ahead of 2009. Many vehicles in 2009 were extended – these now need replacing in 2010,” said Iain Carmichael, head of Audi Fleet Sales.

“Residual values have also improved to the extent that many companies and contract hire and leasing companies are able to dispose of existing fleet without significant losses that were experienced in early 2009.”

Mark Roden, general manager Toyota Fleet, agreed, saying: “Large fleets will be first back to market - as they have particularly delayed their buying cycles and through necessity will have to return to the market because vehicles are ageing and mileages are high, also contracts have already been extended to their maximum in many cases.”

This view that contract extensions, which have become commonplace over the past 18 months, will tail off in 2010, is shared by many.

“Vehicles that are now five-years-old and have maybe clocked up 110,000 miles or more have reached a pivotal point in relation to their age and maintenance profile,” said Vincent St Claire, managing director, Alliance Asset Management.

“Outright purchase fleets that continue to run these vehicles will find that SMR costs escalate significantly, while contract hire and leasing companies have a reducing appetite to continue to lease them.”

However, he suggests some fleets will still be reluctant to sign new lease contracts, and may instead turn to mini-lease and short-term rental.

The BVRLA is more upbeat, although even here there are fears that some fleets will have become used to keeping their cars for longer.

“Companies can’t keep extending contracts indefinitely,” said Lewis. “However, having successfully lived with extended contract terms of 42 or 48 months, many organisations may now be tempted to make this the norm.”