In the automotive sector, the electric transition will involve leasing, a major trend emerging at the moment. In France, leasing accounted for 47.2% of financing by individuals for the purchase of a new car last year, compared with only 11% in 2012, according to figures from C-Ways. The same trend can be seen in Belgium, where the Belgian federation of vehicle leasers says that 23,500 new cars will be registered under the private leasing scheme in 2021, compared to 17,000 in 2019 and 7,000 in 2016.
In Luxembourg, the Société nationale de circulation automobile (SNCA) does not have detailed data on private leasing. However, it says that in 2021, 56.86% of new car registrations were in the name of a legal entity, i.e. in the form of private or professional leasing. Still, according to the SNCA, the company car will represent 21.4% of the Luxembourg car fleet in 2021.
Uncertainty about resale
While companies use leasing to improve the salary package of their employees and for tax reasons, private individuals are attracted to this solution to limit the risks of resale.
“Today, the risk when buying an electric vehicle is the return on investment. The question is whether it will be possible to resell the vehicle in two or four years’ time at a level comparable to that of a similar internal combustion vehicle,” says Antonio Da Palma Ferramacho, head of mobility technologies at Luxembourg’s automobile club (ACL).
“The rapid evolution of technology may mean that, in four years’ time, an electric vehicle bought new today may, for example, be outdated in terms of range. The vehicle may also suffer a loss of range due to an ageing battery. These are two unknowns that can influence the resale value of the vehicle. And there is a chance that the electric vehicle will depreciate faster than the combustion vehicle. But we are not sure,” he explains.
This is one of the reasons why leasing companies are able to stand out. They bear the risk by taking care of the resale, unlike private individuals. Because while the fee for the cars includes maintenance, insurance and other administrative hassles, the price also includes the depreciation of the vehicle, and thus the risk of a lower resale.
The ACL expert does not oppose leasing to traditional purchase. In fact, he points out that a person who is particularly interested in cars will probably opt for the traditional purchase of a model with a very good resale value. “You still have to know the subject,” says Da Palma Ferramacho, adding that leasing remains a service with a cost.
However, leasing offers are still very attractive as they can also benefit from government incentives to buy an electric car.
A second car
In recent years, leasing companies have targeted private individuals, and several have formed partnerships with retail banks, which remain key players in the purchase of a new vehicle. Between 30% and 40% of personal loans in Luxembourg are made to finance a car. For example, BIL works with ALD Automotive, Spuerkeess with LeasePlan, and BGL BNP Paribas with Arval, which is a subsidiary of the banking group.
The ACL also has a leasing offer--Electrolease--in partnership with LeasePlan. This offer is coupled with support and advice on the entire electrified mobility ecosystem. Moreover, ACL is actively preparing a comparative file between combustion and electric vehicles.
In terms of the profile of buyers, the ACL notes a trend: “We can clearly see that the electric vehicle is a demand from city dwellers or families looking for a second car. This is how the electric car is considered to be useful at the moment, provided that the car can be charged at home. This is also an important issue, and ACL accompanies and advises its members when they want to change their car and opt for our Electrolease solution. Just as we do in the Mobility Loft on engines, we also advise our members on leasing,"” says Da Palma Ferramacho.
As part of its leasing solution, the ACL offers the possibility of using a combustion engine vehicle for a few days for people who want to go road-tripping during their holidays.