European companies saving
around 12% each month on leasing costs. Antonio Fabrizio
reports.
Go deeper with GlobalData
Lease contract extensions for cars
and vans have become so popular following the economic downturn
they may have saved companies as much as €1.5bn (£1.3bn) in 2009
across Europe, according to recently published research by GE
Capital.
On average, for a 12-month
extension of a 36-month contract, European companies have been able
to save around 12.5% per month on their leasing cost, the leasing
and fleet management company said.
The GE Capital report, which was
drawn-up by its Key Solutions fleet consultancy arm, is based on
data collected from 200,000 company cars and vans on operating
lease contracts, and operated across seven markets (France,
Germany, UK, Netherlands, Spain, Italy and Belgium).
Alex Barbereau, key solutions
leader for GE Capital EMEA, told Motor Finance: “We have
seen significant country differences. If you look at France, a lot
of the extensions occurred at the end of 2008. Other markets such
as Germany and Spain were very much skewed towards 2009.”
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By GlobalDataBetween 2007 and 2009, contracts on
average increased from 31 to 39 months in France (where
shorter-term leases are common) and from 39 to 41 months in
Germany.
However, UK companies only extended
leases by one month (from 35 to 36), and Italian companies by 15
days (from 41.25 months to 41.75 months).
In Northern countries, some
companies have gone as far as to extend contracts to 54 or 60
months, Barbereau added.
Of the GE Capital customer base,
last year around 80% of large customers – those with big,
pan-Euroean fleets – decided to extend contracts.
According to Barbereau, the lease
extension trend is also continuing in 2010, as companies are “still
very cautious despite seeing the first signs of economic recovery”.
But he warned contract extensions have two “sets of limitations”,
which influence the extent to which they might be used on a
long-term basis.
“First, there is an asset
driven-limitation, a maximum limitation that the leasing company
can accept in terms of maximum mileage, because there is a moment
when the high mileage will pull such high costs, that the overall
lease extension doesn’t make sense any longer,” he said.
“But there is also an
employee-driven limitation”, he added. “There is a maximum
employees can accept in terms of duration period – this is specific
for company cars, rather than vans.”
Therefore, contracts might have
increased because of the crisis, but it won’t last forever, he
said.
“As we see the economy recovering, there will be more pushback
from employees for shorter periods,” Barbereau said.
