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Car Leasing: An Upcoming Trend in Auto Sector
As the Indian economy is booming and corporate is doing brisk business, car leasing opportunities is supposed to bring next wave in automobile sector. Car leasing has become big business in India. The corporate sector is increasingly hiring vehicles from car leasing companies. Though this concept will take time to shapeup, the corporate sector has already accounted for nearly 6 lakh of the 12 lakh cars sold last year in India.
Earlier, most Indian companies tend to buy cars or provide cash to employees (in salaries) as car allowance. Recently, the companies view this as an extra expense on individual employees. But if the company provides the facility through car leasing, their expenditure will be reduced. Thus it minimises the pressure on the company of sustaining such allowance. The concept has already gained popularity in US and Europe.
Earlier, most Indian companies tend to buy cars or provide cash to employees (in salaries) as car allowance. Recently, the companies view this as an extra expense on individual employees. But if the company provides the facility through car leasing, their expenditure will be reduced. Thus it minimises the pressure on the company of sustaining such allowance. The concept has already gained popularity in US and Europe.
Advantages:
Car leasing has several advantages – The car leasing allows the corporate to use the car without the hassles attached with ownership and maintenance. The lease is granted for a specific period against a rental under an agreement signed by the company and the car leasing company. Leasing a car also helps to avoid certain car related risks, usually borne by the owning companies.
The outsourcing of cars for the companies will also attract tax benefits for the company. It will reduce car related hassles – like maintenance, servicing, insurance, replacement & repairs and depreciating value of the asset. Outsourcing will also reduce the expenditure on hiring drivers. Not only corporate, but independent individuals can also lease cars from these car leasing companies. After the lease period, the individual can also exchange it for a latest car.
What’s new in the sector?
There are around 30,000 cars under leasing operation in India. The leading car lease companies in India like the Leaseplan, Hertz India and Arval (an arm of BNP Paribas) are now taking active interest to build the future of car leasing in India. Arval has ambitious plans for India as it has set a target to own a fleet of 10,000 vehicles over the next five years. Currently, the company owns 125 vehicles which are available for lease in Mumbai, Chennai, Bangalore and Delhi. The company has plans to spread in the emerging cities like Pune, Hyderabad, Kolkata and Ahmedabad.
Arval plans to approach the corporate companies creating awareness about car leasing. The company has come up with pronged strategies to buy their official cars or lease the same to them on cost effective rentals.
Leaseplan and Hertz India have decided to invest Rs 2,000 crore and Rs 500 crore, respectively, in order to meet the potential of the lease market, over the next five years. Leaseplan currently has a fleet of 12,000 cars and also plans to expand to 40,0000 cars by the end of 2012. Hertz India leasing company, which has a small fleet of 2,000 cars plans to increase it to 9,000 cars by 2010.
As Indian car market is flooding with new models equipped with modern technologies, the mindset of buyers is changing, now nobody wants to keep the same car for long. And car leasing provides a perfect option for them.
Arval plans to approach the corporate companies creating awareness about car leasing. The company has come up with pronged strategies to buy their official cars or lease the same to them on cost effective rentals.
Leaseplan and Hertz India have decided to invest Rs 2,000 crore and Rs 500 crore, respectively, in order to meet the potential of the lease market, over the next five years. Leaseplan currently has a fleet of 12,000 cars and also plans to expand to 40,0000 cars by the end of 2012. Hertz India leasing company, which has a small fleet of 2,000 cars plans to increase it to 9,000 cars by 2010.
As Indian car market is flooding with new models equipped with modern technologies, the mindset of buyers is changing, now nobody wants to keep the same car for long. And car leasing provides a perfect option for them.
