3 Jul 18

Kia the surprising leader on Private Lease market

If you're a business, you lease cars. If you're a private customer, you buy one. That accepted wisdom has been turned upside down by private leasing. Examining the phenomenon, Dataforce sees a “big wave” coming at the industry. 

Dataforce looks at the evidence from three key markets for the private lease phenomenon: the Netherlands and the UK (where the practice falls under operational leasing) and Italy (financial leasing).

50% increase
Following the above definition, the Private Lease share of the total market in those three countries has increased from 0.9% in 2015 to 2.1% already for the first five months of 2018. In terms of total volume, that corresponds to an annual increase of around 50%. 

Growth has been remarkable especially in the Netherlands, where Private Lease has attained 10.6% of the Total Market in the first five months of this year. 

Accountancy rules
“This (rate of growth) might just continue next year”, says Dataforce analyst Julian de Groot: “New accountancy rules in 2019 dictate that in principle you need to put cars under operational lease on the company’s balance sheet. As that might restrict the financing opportunities of companies, we will probably see a shift from company cars to employee-centred mobility budgets. That seems to be the perfect opportunity to get a Private Lease contract”.

Interestingly, the general trend towards Private Lease is not affecting all car brands to the same degree. In the three countries selected, Kia is the surprising leader in the Private Lease segment. 

Top scorers
In both 2017 and 2018, the Asian brand has managed to register more of its cars under Private Leasing than any other brand. Kia's market share for YTD May 2018 is 12.5%. The next best-performing brands in the Private Lease segment in the three markets combined are Volvo (9.3%) and Toyota (7.3%).

Looking at Private Lease as a share of total brand sales, the top scorers among the luxury brands are Volvo (13.2%), Maserati (8.2%), Ferrari (8.0%), and Jaguar (6.4%). Volvo's excellent performance is due in large part to its car subscription strategy. For volume brands, the largest shares of Private Lease sales are for Kia (7.8%), Toyota (3.6%) and Smart (3.4%).

Interesting disparity
Unsurprisingly, Kia also has the two top models in the Private Lease market: the Sportage (4.4%) and the Picanto (3.7%), followed by the Toyota Aygo (2.5%). Also doing well is the Volvo XC60 (1.9%).

As for customers most likely to snap up a Private Lease deal, Mr De Groot sees an interesting disparity: “It's either the customers of mini-sized cars or large-sized SUVs and passenger cars that seem to be more interested in Private Leases, relative to the market average”. 

Authored by: Frank Jacobs