Leasing is gaining on buying in Turkey
Leasing or buying, what is the best method to finance your fleet? The answers vary as much as the markets do, and Turkey is no exception. We asked the specialists four questions each. Here are their answers.
1. What’s the best practice in terms of funding fleets in Turkey today?
2. How to decide if it’s better to lease or to buy your fleet vehicles in Turkey?
3. If you choose leasing, how do you select the right lease providers?
4. What's going to happen on the Turkish lease market in the next few years?
Savasan Kaplan (Fleet Logistics)
1. “Due to traditional preference for ownership and lack of knowledge of operational leasing, purchasing is still the leading method. But operational leasing is continuously growing, especially in big local companies and in multinationals”.
2. “Are fleet decision makers asking the TCO question? As the understanding of the advantages of operational leasing on the balance sheet, cash-flow and taxation rises in the market, the decision will lean towards leasing”.
3. “Almost all major international players are present, as are many local ones, so there is a broad range. The common mistake is for fleet managers to be only sensitive to price. But the car itself is just one aspect of the contract”.
4. “Both customer mindset and lease companies are maturing rapidly. Also the effort to overcome restrictive regulations in commercial vehicle leasing will add a boost to the industry”.
Timur Kaçar (ALD Automotive)
1, 2. “There are two common practices in funding fleets in Turkey; purchasing and operational leasing. Today the trend of operational leasing is increasing because of the comfort and ease of use it provides”.
3. “Customers need to do extensive research in accordance with budget and needs in order to receive the best service. To lease a car by only evaluating the price often has negative consequences”.
4. “In recent years, in addition to large companies, SMEs prefer leasing to purchasing because of operational and financial advantages of operational leasing. In addition to corporate operational leasing, private leasing is also launched recently. Since Turkey is still mature market for operational leasing market with 15% market share in automobile sector there is a big growth potential in upcoming 10 years”.
Philippe Chabert (TEB Arval)
1. “Almost 1 out of 2 Turkish companies choose self-purchasing their company vehicles, 3 out of 10 are using car credit to finance their company vehicles, a Turkish specificity whatever the company size. But operating leasing has a promising future in Turkey, whatever the fleet size and the company size”.
2. “In principle, it's better to buy if it is strategic for the company. If not, and very often it is not, it is better to outsource the fleet management to an expert company and focus on the core business and the strategic activities”.
3. “The service provider should be a partner, as it deals with a mid- to long-term relationship. That’s why the business sustainability of operational leasing companies should be a key factor. It should be strong enough to deliver its promises over the next coming years”.
4. “The growth in operational leasing market is nearly 15% while automotive market has shrunk by nearly 10%. Moreover, the expected increase in passenger car motor vehicle tax by approximately 25%, which changes depending on the engine size and vehicle life cycle, will also push companies towards leasing over outright purchase”.
Nevzat Girgin (Fleetcorp)
1. “67% via outright purchase, 14% via car credit, 6% via financial lease and 13% via operational lease”.
2. “According to our research, operational leasing has an advantage of 18% over outright purchase”.
3. “The important point is the coverage of the quotations, because when leasing a fleet, the price is a significant factor, but the content of the agreement is much more valuable”.
4. “Until recently, there was a rental price-oriented approach in Turkey but now the TCO-oriented approach is increasing in Turkey”.
Ali Kemal Uluer (VDF)
2. “You must make a clear analysis of your need. Then build your fleet structure, and TCO and mobility analysis. This is not easy, so you will need to consult with specialists. Operational leasing offers this help”.
3. “Your providers must have enough knowledge and sources to give consultancy on those very crucial subjects: financial results, operational efficiency, health and safety, and motivational aspects”.
4. “Growth will probably continue in the long run. Even at SME level, fleet management will be outsourced. Even electric cars and autonomous driving are already becoming popular”.
Ali Kemal Uluer (DRD)
2. “Operational Leasing is the more preferable practice because the sales value and all the maintenance and repair costs of the vehicle are covered by the leasing company”.
3. “The main difference points are Financial and Operational benefits. For the right selection between the lease providers, fleet managers must consider more than pricing”.
4. “Awareness of the fleet leasing industry is rising and the sector is growing annually by around 17%”.