8 oct 17

Sergey Dianin, LeasePlan Russia: "Car sharing is fastest growing mobility segment"

“Finance leasing is still booming in Russia, it has grown more than 30% compared to 2016. The main drivers are that it had a low base rate so growth was inevitable and State orders, in areas of aviation and railways, helped to boost it" opens Sergey Dianin, managing director of LeasePlan Russia, the discussion on the fleet management outlook 2018.

"And now the Russian Government is turning its attention to cars and for the second year running a support programme for car finance leasing, so that too is growing. The economic situation is improving but not perfect. As a result, operational leasing or full service leasing is being met with hesitation. The situation in business is linked to economic recovery. International companies are extending use of the existing fleet for longer periods so they change policies or override them, extending the lease from three years to four, or from four years to five." 

50,000 cars in operational leasing
Russia’s GDP is positive (1.7-2% growth). Inflation decreased to 4.5% (compared to 5.4 in 2016 and 12.5% in 2012). The exchange rate is stable and there is no expectation of any change. "Economy rose about 2% this year and business is adapting to the new situation looking for new ways to develop and growth. The automotive market has grown 10% in volume compared to 2016. Cars have become more expensive, since 2014 when the Ruble rapidly devalued. Cars today are 50% higher in cost than they were 3-4 years ago because of this. It’s linked to investment value and rental size. We don’t have precise statistics but can confidently state (given the information from Association of European Businesses) that there are more than 50,000 cars in operational leasing in Russia, which is a good result for such a young market. However, the size of the corporate fleet market in Russia is 3.5m, so you can easily see the potential for growth.”

What is the outlook for growth in the sector?
“The primary customers for operational leasing are international companies. Russian companies are not yet well addressed by the market or aware of the benefits. These international companies currently have some 400,000 cars in Russia. The remaining 3-million are all Russian companies (corporates and SMEs) and that’s where the growth will come from.”

What trends can you look out for?
“There are just a few providers in this large market. What will change it is the emergence of small local players who are aggressive in their marketing. They will try to steal market share from existing suppliers. But there will be many more competitors coming, not only small local businesses but large companies, the disruptors, offering new product and services.

Secondly, state owned banks have changed their outlook and are now offering operating leases instead of just finance leasing. They have done this with the aviation customers, now it’s cars. They’ve switch focus to the automotive segment. And there are some signs that international companies that offer operating leases are starting to operation in Russia.

Also, the dealer channel is getting in on the act now and being aggressive but I wonder if they will offer the required professionalism and service and that concerns me. Perhaps they will give our whole industry a bad reputation.

Then there’s fleet management and mobility. Reorganisation of the taxi business in Russia is changing the face of transportation in general here. Only licensed operators can offer taxi services now and it’s made it better and much safer. It’s also more cost efficient than in the past and prices have decreased up to 40% as a result. It’s so easy to open an app like Uber and this is now part of the mobility offering. Car sharing attracts fleet managers as another smart mobility option in cities. It’s a start but is set to develop. However, it’s not common practice for corporates to use taxi services instead of company cars or to see a taxi as the mobility solution but some companies need flexibility and will use taxis or car sharing instead of temporary hire car as part of their mobility policy when needed."

What can you tell about LeasePlan in Russia?
“We are currently the fastest growing player in the market but we’re not as aggressive as our local colleagues. We don’t take much risks, we’re prudent and our main driver for development is corporates that used to own vehicles but now want to lease them. We work hard to increase our fleet, provide better services for our clients as well as provide them with vehicles and transport and mobility solutions. Currently LeasePlan have 6,500 vehicles that are managed on operational leasing."

You recently conducted a report on car sharing in Russia. Why?
"Car sharing is interesting to us, as both a general trend and new way for public transportation. It is the fastest growing mobility segment in Russia and has been for two years. In Russia, there are more than 3,500 cars in four cities (Moscow, Saint Petersburg, Sochi and Ufa) in car sharing schemes. Moscow is of course the largest. The total number of subscribers is one million. LeasePlan is the pioneer in partnering with car sharing operators doing all about the car while the car sharing company does all about the client.

LeasePlan has a corporate car sharing scheme, SwopCar. Is it the goal to start this in Russia?
"No, LeasePlan does not plan to start car sharing schemes in Russia in the near future. What we have in mind is to facilitate and be the technology partner for corporate car sharing and other shared services. LeasePlan has a Europe-wide partnership with Uber and it’s the same in Russia. We provide Uber drivers with a car."

What is the LeasePlan Russia ambition for 2018?
"Our ambition is to continue to grow. All the products we’ve started today will come to fruition in the near future. These include a reporting tool to make the fleet more transparent to our clients; initiatives for drivers to improve his or her mobility; improved communication between driver and leasing company. Our primary aim is to continue to expand the market from ownership to leasing.”

To end, what are your top tips for international fleet managers having a fleet in Russia?

  1. From a fleet management perspective, Russia is not that different from Europe. Certainly there is the huge geographical size of country, with 9 time zones, and infrastructure development that makes Russia different, but it is not black and white.
  2. It is rare to find a company that really knows and understand its true fleet costs. Look carefully at existing cost structure and compliance matters linked to the fleet.
  3. Look carefully at offers you receive from different service providers, because price is not always the best choice. It depends on the package being offered, stability of services and its content.
Authored by: Alison Pittaway