16 Apr 19

Used car and private lease: a match made in heaven

Used car leasing brings great opportunities for leasing companies. It gives them more control over the remarketing sweet spot and enables them to enrich their customer base with private consumers.  

Used car leasing seems to offer nothing but advantages. For lessors, it means the contract duration is disconnected from the lifetime of the vehicle. “This provides flexibility by optimising the use of the vehicle in terms of moment of sale, potential releasing opportunities or adding it to a flexible pool of vehicles”, explains Carel Bal, ALD Automotive’s Director & Second Lease Sponsor.

“Leasing companies gain in agility and control over how and when a vehicle is used and can adapt sales based on market conditions. Additional benefits include managing residual value risk, expanding the customer base and fleet, creating economies of scale, expanding service offerings and further diversifying client segments,” he adds.

Retail customers for used-car leasing benefit from more flexibility, cost effectiveness, shorter leasing periods, easiness of returning the vehicle, a higher-quality car for an advantageous price with maintenance included and no delivery delays. “There is also no hassle at the end of the contract in selling the car, you just return it and can opt for a newer model. For corporate customers, employees have a broader range of vehicles to choose from which they wouldn’t normally have access to,” explains Carel Bal.

Young & attractive

ALD Automotive clearly sees potential in the used-car leasing market with activity increasing significantly by 2020 through their digital platforms and retail outlet coverage. “With operations available in all of our mature markets, where there is demand for private lease in general, these will be our focus areas in the next 12-18 months,” Carel Bal says.

Indeed, there is a strong connection between used-car leasing and private lease, reckons Frank Van Gool, managing director of Belgium’s leasing and rental federation Renta: “2019 will be the year in which used-car leasing breaks through. The biggest chunk of that segment will be taken up by private-lease providers.”

According to Mr Van Gool, the private-lease market is an ideal environment for offering young, small and well-maintained used vehicles to a new consumer audience, at an attractive price. Which vehicles are ideal to be leased second hand varies from country to country, but ALD Automotive lists four sources: early returned vehicles (0-2 years), regularly returned vehicles (3-4 years), specifically bought vehicles to enhance their varied offering on their car sales platforms where they offer vehicles for sale or lease, and finally manufacturer partnerships through partners’ stocks.

“Selection criteria depend on B2B and B2C profiles who have different needs and expectations as to the vehicle type, brand, usage, mileage, and so on,” says Carel Bal. “Our aim is above all to ensure that we provide our clients with excellent quality whether the leased vehicle is new or used.”

Authored by: Dieter Quartier