THE operating lease market is less developed in Sweden than in many other European countries, and the international fleet manager has only a couple of international operational leasing companies from which to choose.

Half of all new company cars in Sweden are financed by leasing, and finance leasing remains the most common form of funding.

For a long time Swedish financial companies were founded by and closely connected to banks. The bank-owned finance companies still dominate the leasing market and account for about half the lending for leased cars.

The other half of the leasing market is owned by independent firms or car companies, among which the largest is Volvo Car Finance. Some of the independents are international players, such as GE Capital, Lease Plan, and Hertz Lease (formerly Axus). With the exception of GE, they all have just a fraction of the Swedish leasing market, but they all offer operating leases.

In 1988, the first attempt was made to introduce operating leases to the Swedish market. Based on the contract hire model, it was called Butler and failed badly during the finance crises of the early 1990s.

Based on this short history, it goes without saying that the management services provided by Swedish financial companies are not well developed. For instance, when a new taxation system for company cars was introduced in 1997 - where the driver had to pay for fuel - fleet management companies had problems building systems that could cope with the change.

But management services are not expensive and customers are getting used to the service standard, although there are still finance companies which do not offer the facility. Even among those actually providing it, the level of knowledge is not as high as that of, say a professional fleet manager or consultant.

To date, many Swedish finance companies are not used to working with international customers, which is why the international fleet manager should either choose from the international finance companies operating on the Swedish market, or maybe the big Swedish players, such as SEB, Handelsbanken or Nordbanken.

They all work with operating leases at an international level - Nordbanken Finans is the Swedish partner in Interleasing, and Handelsbanken is part of Auto Leasing Europa.

The international fleet manager should be aware that in a couple of years finance leasing could see new legislation that would distinguish between finance and operating leases.

Then, maybe, both Swedish customers and finance companies will understand why their European colleagues prefer operating leases from finance leases.

Anders Ödahl is editor at Swedish fleet consultancy Ynnor, telephone +46 (0)40 354878. (April 2000)