Fleet News

Contract hire booms in European market

OPERATIONAL leasing, the continental name for contract hire, is the fastest growing form of fleet finance across Europe, according to a new report.

'The Operational Leasing Market Evolution' by Datamonitor, says that mature fleet markets like the UK and the Netherlands, which have a high contract hire penetration, are already in 'full flow' and have set the tone for less established markets such as Germany and France.

However, the report also predicts a slow down and stabilisation of the European company car market after what it describes as five years of 'above average increases in volume'.

Operational leasing is at different stages of development across the seven major European countries of Belgium, France, Germany, Italy, Spain, The Netherlands and the UK.

'Some of these more developed European countries have reached maturity, with companies forced to gain new business through the implementation of newer, more sophisticated products,' said Datamonitor.

'As these company car markets begin to slow, growth is inevitably going to come through the introduction of products which will attract whatever new business enters the market as well as existing business from other acquisition methods.'

The report adds that the company car market in Europe is expected 'to show relatively slow growth going forward, stabilising after five years of above average increases in volume'.

However: 'The one common factor for all European markets is that operational leasing is the fastest growing acquisition method.' The study suggests that growth in the more developed countries has been relatively low 'due to the maturity of the market and the penetration this product already has in the fleet sector'.

'Southern European markets have been experiencing above average growth with countries such as Spain and Italy more than doubling their fleets over the past half a decade,' Datamonitor said.

'In the coming years, growth will be more dependent on market conditions than the growing popularity of operational leasing products, which up to now has grown regardless of market conditions, substantially penetrating the fleet sector.

'Although demand for operational leasing products is still increasing, growth is expected to be more reactive to fleet demand and market conditions.'

  • Information based on analysis from Fleet Markets database. For a copy of the report and for pricing details contact Yasmeen Khan at Datamonitor on 020 7675 7487 or email ykhan@datamonitor.com, or visit www.datamonitor.com

    Operational leasing: a country-by-country breakdown

  • THE UK: While the UK is the most developed fleet market in Europe, it is also expected to be the slowest growing, resulting from a slowing economy and market maturity, according to Datamonitor. 'Over the 2001 to 2007 period, the UK operational leasing fleet is expected to record a compound annual growth rate CAGR of 1.8% to reach a volume of 1.72 million cars, accounting for a 47.4% share of the company car fleet.'

  • THE NETHERLANDS: Operational leasing, is the dominant form of fleet finance in the Netherlands, achieving a 56.6% share of the company car market in 2001, according to Datamonitor.

    'This high penetration can be attributed to the almost non-existent role that finance leasing plays in the market, as well as the sophistication of the product and service portfolio,' it said.

    However, growth to 480,000 cars in 2001 is expected to slow due to 'the maturing operational leasing fleet and the expected slowdown in the economy'. Over the 2001 to 2007 period, the Dutch operational leasing fleet is expected to record an average growth of 4.3% to reach a volume of 622,000 cars and a 56.9% share of the company car fleet.'

  • SPAIN: The Spanish operational leasing market is by far the fastest growing market in Europe, despite being relatively immature, and has already overtaken Italy in terms of volume and product sophistication.

    Operational leasing now accounts for more than 239,000 cars in Spain, increasing from a 10.6% penetration in the company car market in 1997, to a 33.4% penetration in 2001 although company car purchases only constitute 15.7% of new car registrations.

    Over the next five years, Datamonitor predicts, the Spanish operational leasing market is expected to more than double and is forecast to record an average growth over the period 2001 to 2007 of 15.9% to reach a volume of more than 575,000 cars.

  • ITALY: Italy has been 'one of the first casualties of the European economic slowdown', with a negative impact on the car leasing market, according to Datamonitor.

    Between 1997 and 2001 operational leasing grew by 29.3% to account for 195,000 cars and a 13.2% penetration of the company car market, the report said.

    'The Italian market had been predicted to continue growing substantially over the coming years, but has experienced a major set back in the first quarter of 2002, where the operational leasing fleet did not increase at all.

    'Over the 2001 to 2007 period, the operational leasing fleet is forecast to record an average growth of 11.1% to reach a volume of 368,300 cars and a company car penetration of just 20.1%.'

  • BELGIUM: Despite its relative maturity, the Belgian operational leasing fleet is expected to experience the third strongest growth of the countries studied in the report. It already accounts for a volume of 161,000 cars and a 31.9% penetration of the company car fleet, according to Datamonitor.

    'Growth moving forward is expected to slow, although it will still remain strong considering the level of market maturity and the general economic outlook in Europe. Over the 2001 to 2007 period, the operational leasing fleet is forecast to record an average growth of 9.8% to reach a volume of more than 282,000 cars and a 42.3% penetration of the company car fleet.'

  • GERMANY: The German operational leasing market has fared relatively well, increasing by 9.6% in 2001 to reach a volume of 601,000 cars and a 16.0% penetration of the company car fleet.

    'The company car market in Germany has experienced several difficulties in recent years, with an oversaturated used car market resulting in falling residual values,' said Datamonitor.

    'Over the 2001 to 2007 period, the operational leasing fleet is forecast to record an average growth of 9.1% to reach a volume of more than 1.01 million cars and a 24.8% penetration of the company car market,' it said.

  • FRANCE: The French operational leasing market has grown considerably over the past four years, recording an average growth of 11.9% over the 1997 to 2001 period to account for 1.06 million cars and a company car fleet penetration of 19.6%.

    However, Datamonitor said: 'The French operational leasing fleet is expected to slow over the coming years, largely reflecting the maturity of the French company car market. Over the 2001 to 2007 period, the operational leasing fleet is forecast to record an average growth of 8.2% to reach a volume of 1.7 million cars and a company car market penetration of 24.2%.'

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