Analysis
17 Jan 16

Portugal: Fleet-owners increasingly prefer renting and leasing

Portuguese companies are increasingly using more professional vehicle acquisition models. Renting (full service leasing) and finance leasing have gained ground, but direct purchase is still significant.

 

Not so different from what occurs in other countries, the way Portuguese companies finance their fleets is related to their size. Among smaller companies, traditional financing models like credit and leasing are still predominant. Among medium and larger companies, renting is predominant. And in large multinational companies, renting is not only preferred, but almost the exclusive acquisition model. However, there are still some large companies that prefer direct buying (by international indication), as well as smaller companies that also do so.

Operators say that the renting market has already matured, after several years of growth. There was one recent year when it suffered an unprecedented low, to then return to quite considerable rates the following years.

 

Renting = Operational Leasing

In fact 2014 was the year when renting (operational leasing) definitively surpassed leasing (finance leasing) as the preferred financing model by companies. This option was responsible for 15.6% of all vehicles financed in the country, which translates into 26,377 units. As generally happens, it kept pace with growth of the automobile market, reaching 34.9% more than the previous year.

Leasing financed 2,652 fewer vehicles. The total was 23,725 cars, but the financed value on average was higher. While each leased vehicle is worth an average of 19,515 Euros, when renting this amount is 18,197 Euros.

The fleet managers themselves are satisfied. The reported figure was over 30% growth and there was even one with 60% more new contracts than the previous year – especially small and medium companies.

The past year was marked by many fleet renewals, after investments had been stagnant after the financial assistance program had taken force. A deceleration was to be expected.

But data published by the ALF, the Portuguese Association for Leasing, Factoring and Renting, which encompasses almost all national managers, show that the total number of vehicles registered by renting companies during the first half of 2015 was 12,403, including both passenger and commercial versions. Compared to the same period in 2014, this represents a positive change of roughly 12%.

 

More competition


Paulo Pinheiro, chairman of the ALF, recognizes that the market is much more professionalized and competitive, with companies and individuals thinking very carefully before deciding to purchase a new vehicle, as well as searching for the best financing methods.

“The diversity of automobile solutions has notably become part of national discussions. That is good for specialized financing! Leasing and renting are well-known products in which economic agents trust, making it therefore natural that, in the first half of 2015, automobile leasing grew by 48%, while increase in renting during this same period, compared to 2014, was 21%.”

Basing his conviction on the current behaviour of the Portuguese automobile market, Paulo Pinheiro expects to end 2015 with double-digit growth rates, on par with or even outperforming the weight of leasing and renting in the global automobile market.

Domestic companies increasingly use leasing because the product gives them assurance at the operational level that they would otherwise not have. Signers favour assistance and service, and fleet managers like receiving a fixed income for use of the vehicle. On the other hand, rental prices are increasingly more competitive. As a result of competition that involves not just fleet managers, but the brands themselves, it is now possible to sign low-volume deals that, until recently, had been limited to large contracts. 

 

Hugo Jorge