Global rise of the car leasing industry
Business vehicle leasing has turned out to be quite effective for varied corporations in many areas of the world, including Europe, North America, and the Asia Pacific region. So, the car leasing industry has boomed immensely over the last few years all over the globe. This blog lists important insights related to the global rise of the business car leasing industry.
There used to be a time when the pride of ownership was more important than the financial inconvenience associated with it. But, with the emergence of private and business car leasing, there has been a noticeable shift in people’s mindset.
Today, many people, small to medium enterprises, and other corporations have shifted from owning a fleet of cars to leasing, considering the benefits that vehicle leasing offers. It not only allows you to upgrade to the latest vehicles with advanced safety features every 3-4 years, but also offers the convenience of a fixed EMI including maintenance cost. In addition, it offers zero risk on resale value, hassle-free use, maintenance services, and lower or no down payments.
Private and business vehicle leasing is perfect for individuals and corporations respectively, who do not prefer to use the same vehicle for a long period of time, and do not wish to fall under the burden of exorbitantly high down payments. In India, the car leasing industry is booming at a considerably good rate, but the trend is yet to catch on. According to Skoda Auto India, the market for car leasing in India will be driven by professionals like CAs, doctors, and small or medium enterprises. However, in countries like the US, UK, France and Germany, the leasing industry has already built a strong market.
The fact that car leasing is cost-efficient in the long run has grabbed the attention of individuals as well as SMEs, considering they already want to cut down unnecessary expenses as much as possible, due to lack of capital. It has become a better alternative for SMEs to cater to the transportation needs of their employees. It is also popular among corporates, because it allows the lessor to own the vehicle at the end of the lease contract.
It has been reported that the global car leasing market will witness a compound annual growth rate of 14% during the period of 2019-2023. In order to drive this expected growth, various vehicle leasing companies are incorporating the use of telematics to make fleet management more convenient. So, telematics will definitely play a vital role in this forecast period. With telematics, operators can track their vehicles, know the distance and the locations traversed, and offer roadside assistance. Moreover, with the use of telematics data, business car leasing companies also encourage their clients to opt for eco-friendly driving, by spreading awareness about the ill-effects of carbon emissions and the significance of fuel efficacy.
Asia Pacific (APAC), Europe, North America, and South America are the eminent regions that form the global car leasing market. APAC will have the biggest share of the market by the end of 2023, with the SMEs in China, India, Indonesia, Australia, and Japan preferring the option of car leasing. Since private car leasing has not emerged as much as business car leasing, commercial customers will be contributing much more to the expected growth than non-commercial customers. With more mobility demands and high-end fleet management solutions, car leasing companies all over the world have increased the demand of leasing. With the intention to diversify the market, governments all over the globe have also started offering tax reforms and highly favourable schemes on leasing second-hand cars. This has surely encouraged the emergence of electric vehicles in the market and attracted low-income customers.
Here are some useful insights on the rising global car leasing market:
- ALD Automotive, Societe Generale, Volkswagen Leasing Services, Mercedes - Benz Financial Services, Athlon, Natixis Leasing, and LeasePlan are the prominent players in the global car leasing market.
- Sedans are the most preferred type of vehicle for car leasing worldwide.
- Europe and North America are the dominating areas of the global leasing market.
- Approximately 30% of new cars in Europe are registered as leased vehicles, because of the increasing demand for mobility.
- Increasing number of small and medium enterprises are the reason for the increasing demand of light commercial vehicles, when it comes to leasing.
Sources/Reference Links used:
Tech Navio- Global Car Leasing Market 2019-2023, Feb’19 https://www.technavio.com/report/global-car-leasing-market-industry-analysis
Transparency Market Research- Car Leasing Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2018 – 2026 https://www.transparencymarketresearch.com/car-leasing-market.html
The Economic Times- Top automakers offer vehicles for a monthly rental with no down payment June’19 https://economictimes.indiatimes.com/industry/auto/cars-uvs/if-you-dont-want-to-buy-a-car-well-lease-it-to-you/articleshow/69749295.cms?from=mdr