Analysis
31 Mar 21

How the car leasing product is becoming truly global

Leasing has not become the prime method of company car acquisition in Europe and North America overnight. A combination of favourable tax rules, vendor maturity and customer acceptation has lifted the lease product to its default status today.

Aiming to repeat the evolutive process outside of the traditional markets, lease providers are now extending their reach into APAC and LATAM, and first successes are being booked. But there’s more to this story.

A two-speed reality

Back in the 70s and 80s, customers could choose from a multitude of smaller providers, many of them smaller family businesses or add-ons to a larger business: dealerships would have a few cars up for lease, short term rental companies would venture into long term…

Following clear and favourable regulations on leasing across the first markets, these businesses grew, became investment opportunities and the supply chain started consolidating. A few decades later, the European and North American lease markets are dominated by a handful of players.

The reality is slightly different in APAC and LATAM, of course, and even if the lease providers count on repeating the EU/US success in the emerging markets, they will have to adapt to a world where the accelerator – favourable tax regulations – is not present or not explored by enterprise customers.

From a marketing perspective, this means that leasing companies need to run two campaigns: retention of customers and earning market share from their competitors in Europe and North America whilst stimulating demand and acquiring market share in the emerging markets.

The new European Lease Customer

European customers aren’t only facing the complexity of growing their portfolio across the world, they are also hungry for a new flavour: mobility. The trend is driven by factors that are unlikely to go away (sustainability, digitisation, technology), meaning mobility will become inevitable.

Customers expect their leasing provider to come up with flexible and on-demand products and services that cater for their future needs, but that is easier said than done.

From a business model point of view, the leasing industry is essentially a sourcing business: acquiring assets at the best price, leveraging volumes, disposing with profit – this is what their investors and shareholders signed up for.

The mobility industry operates on an entirely different business model: making microscopic profits (if any) on millions of transactions and generating consumer data is what they do – and it’s miles apart from the lease business.

Resilience and Partnerships

Nonetheless, the leasing industry has been faced with challenges before and it has the infrastructure, power and intelligence to deal with the next one. Rather than trying to be “everything to everyone” leasing vendors are adopting partnership strategies. They look for friendly companies that help them take away complexity, create new products and, ultimately, keep the customer. The partners – mobility, telematics, data processing – are happy to work with large volume businesses and enter the corporate world. A win-win-win, if we include the customer in the equation.

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Image copyright: Shutterstock

Authored by: Yves Helven