Europe Car Leasing Market Share, Growth & Trends 2020-2027
The Europe car leasing market is anticipated to grow at a CAGR of 3.25 % between 2020 to 2027. Increasing continuous innovation and new product development is expected to impact the industry favorably. Companies may leverage established infrastructure to attain a competitive advantage. The focus on sustainable mobility has paved the way for the growth of car leasing in the European market.
Automobile lease companies and financial institutions (i.e., banks) lead the industry as a result of which huge customer base and affordable funding have been possible, which provides an additional boost to the car leasing business in central and Eastern Europe. In addition to this, shifting corporate towards leasing has further improved the scope of business. However, stringent norms and regulations imposed by the government along with environment limitation have been noticed which create a restraint towards the leasing business.
Compared to car leasing companies in North America and the Asia Pacific, the European market has witnessed a steep growth in terms of business and customer base due to the mentioned reasons earlier. Also, in addition to it, leasing creates fewer hassles regarding transportation for a company as the transportation operations are outsourced to these leasing companies, which also generates scope for employment opportunities.
Europe is a hub for the automotive & transportation industry, with the presence of a large number of automotive manufacturers across the continent. The car leasing industry in Central and Eastern Europe is dynamic, with approximately 13.9 percent of total vehicles in Europe with around 90 percent of the cars as company vehicles or fleet vehicles. Hence we can estimate a tremendous growth opportunity for the car leasing business.
From a customer’s point of view, it is convenient and cheap to use leased car services like the insurance rates, and a charge per kilometer is low. However, the cross border taxes create a hindrance as the prices are different across borders are different; also, the permits to drive the vehicles are restricted to certain boundaries, which cause unnecessary hassle for the customer.
Companies like ‘Peugeot Open Europe’ offer students services that allow students to avail of car leasing services irrespective of nationality and residence outside the country. Also, it provides assistance regarding insurance and support, which protects the owner from breakdown, accident, and theft of the vehicle.
Another well-known company Renault which is a well known European brand is into leasing services. The company offers Tax-free leasing service across Europe, brand new vehicle, 24-hour roadside assistance, unlimited kilometer travel.
Volkswagen, which is a well known German car brand, offers monthly as well as yearly leasing. Services like these create convenience for the consumer, which in turn creates tremendous growth opportunities for car leasing in Central and Eastern Europe.
To sum it up, the car leasing market across central and eastern Europe is expected to grow at a much higher rate. Currently, the forecasted growth rate is CAGR 2.82 % by 2018. Following the current trend, the growth rate of car leasing in Central and Eastern Europe 2022 could be approximately 5.64 percent.
Such accelerated growth gives scope for new players to join the car leasing business in eastern and Central Europe, which would promote the further range of business and, at the same time, provide customers with offers that are convenient hence resulting in future prosperity.
Based on the User type, the market can be segmented into personal and commercial passengers. The personal passenger segment accounted for the largest Market share in 2019, increasing car procurement and maintenance costs are anticipated to boost the market growth over the forecast period.
The commercial passenger segment use expected to attain the fastest growth rate between 2020 to 2027, as the trend of car leasing is growing in the corporate world. Many private companies are opting for a leasing service mainly for the transport of executives and employees.
Central European countries including Germany are the leaders in the automotive industry. The growing cost of vehicles and the emergence of car-sharing services as mandated many German Automotive Manufacturers to come up with a car leasing option in order to improve sales. For instance, the leading Automotive Manufacturers in Germany including Audi, BMW, Fiat, Dacia, Alfa Romeo, and DS are offering car leasing services. Germany accounts for greater than 40% market share in the Central European car leasing market share.
The Eastern European car leasing market is anticipated to grow at the fastest CAGR, considering the growing number of companies offering car leasing services in the region.
The European car leasing market is moderately competitive in nature with companies such as OJSC VEB-Leasing, Gazprombank, and LeasePlan dominating the market. Top European banks including AK Sberegatel’nyi Bank Rossiyskoy Federatsii OAO, Alfa-Bank, Unicredit Bank ZAO, and VTB Bank OJSC provide finance for the leasing services.
Companies in this region focus on acquiring corporate Contracts for car leasing as the corporate segment is the largest and most profitable customer base. Moreover, car leasing companies are creating an agreement with leading banks as their financial partner handles all payment and loan related services. The market has a moderate entry barrier, it needs a concrete business strategy to enter and sustain in this particular market.
Banks playing the role of vendors to provide lease programs. They provide finances at the regional as well as national level. Only three such banks are authorized to provide tax-free lease program; these are Unicredit Bank ZAO, Alfa-Bank, Gazprombank, and LeasePlan. Such initiatives give support to the leasing business and thus help in contributing to the economy.
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