Philippos Zagorianakos, Managing Director of LeasePlan Greece : “The worst of the crisis is behind us”
Greece has hit bottom, and is slowly rising. That rising tide will also lift up the Greek leasing industry. Virtually halved over the past five years, it is expected to grow robustly – taking up to 45% of total vehicle sales. LCVs are one particularly interesting growth area, explains Philippos Zagorianakos, Managing Director of LeasePlan Greece.
“Figures for short-term and long-term rentals are not issued separately, so we have no precise figure”, says Philippos Zagorianakos. “Our best estimates are that there are between 66,000 and 69,000 vehicles in operational leasing in Greece at this moment. Back in 2009, the estimate was around 112,000 units. So over the past five years, the vehicle lease industry has shrunk by 40 to 50%. Of course, that is a symptom of the wider crisis. Car sales declined from 270,000 units five years ago to no more than 58,000 units in 2013. Measured in value, the decline is even greater, as people switch to smaller, cheaper cars. But the prediction for this year is of a slight growth in the lease market to about 70,000 units”.
Things are finally looking up?
“There is an underlying recovery of the economy. GDP was projected to grow 1.5% this year. The trade balance is improving. The deficit has been reduced almost to zero, and a surplus was in the cards. Unemployment is still at 25%, but at least it's stable”.
“In 2014, the car market had recovered to 71,000 units. Ideally, it could have reached 78,000 this year. But political turbulence is slowing things down. It now looks like we'll have another recession year in 2015 – the sixth in a row”.
What is the political turbulence about?
“Our newly-elected government (again led by the left-wing Syriza party, ed.) has to implement a large number of unpopular reforms. But at least now there's no more strong opposition within the parliament to the Memorandum signed with the EU (on Greece's debt, red.), so I think we can look forward to a period of stability”.
In which sectors has the Greek lease industry shrunk most?
“A lot of SMEs simply went bankrupt. But the cutbacks were across the spectrum. Also because the tax advantage for operational leasing was abolished. There were a lot of layoffs in commercial departments: pharmaceutical companies saw their fleets shrink by up to 35%”.
So will that be where you see the industry recover – SMEs and pharma?
“Pharma will not recover that fast, as the government aims to reduce medical consumption. I do expect growth in the tech sector, and in food and drinks. That sector is growing thanks to the boom in tourism: last year, Greece attracted twice as many visitors as before the crisis – obviously attracted by the lower prices”.
“As for the SMEs: the ones that have survived the crisis are obviously healthy and strong. We find they increasingly come to us because they find it difficult to obtain financing. Leasing vehicles for them is a convenient way to free up capital”.
What's your take on the popular makes and models in Greece?
“Toyota usually tops the bestseller lists – also for fleets. This is because of its high residual values. As for models, we've seen a shift towards smaller. Hence the popularity of the Toyota Yaris, VW Golf, Opel Astra, etc.”
What would you say makes the Greek fleet market unique in Europe?
“With close to 90% of medium and large companies using operating leasing for their fleet, Greece has the highest penetrations in Europe. This is due to previous tax benefits – and companies see no reason to change their stance.
Between 40 and 45% of total vehicle sales are for fleets. This is closer to the European average than before. I expect this to remain the case as the car market in Greece grows again – before the crisis, we had an overconsumption of automobiles in Greece”.
In which stage of maturity would you say Greece's fleet sector is at the moment?
“In the developing stage, as evidenced by the fact that there is no clear separation between short- and long-term companies. Rental companies are offering lease contracts, but these are fully closed, with no reporting. LeasePlan was the first to offer transparency when we entered the Greek market 12 years ago. It's fair to say we educated the market – and responded to the need for transparency, especially of multinationals”.
How long before the market is mature?
“The crisis has definitely sped up the process – companies were forced to look hard at cost. I'd say: another 5 years to reach Western European levels of maturity. If the government manages the economy well, I expect operational leasing to be bigger in 5 years than it was 5 years ago – over 120,000 vehicles”.
CO2, EV's and other mobility alternatives - does any of that play in Greece?
“In the pyramid of needs, survival comes first for Greek companies. Green concerns are secondary. But safety is a big issue. Greece has one of the highest traffic fatality rates in Europe. That's why we initiated SafePlan, a driver training initiative that has since been expanded to our other markets”.
What will LeasePlan be focusing on in the near future?
“LCVs are an important focus. Until recently, vans could not be leased. The law has now changed, opening up a whole new market. It will take some time to inform SMEs of the advantages of leasing vans, but as with any new market, growth options are considerable”.