Solutions for vehicle purchase after operational leasing

Interview with Georgiana Lefter, Supply Chain Manager, Business Lease Romania

1. Where are the vehicles sold at the end of the operational leasing agreement?

We use several sales channels according to which we adapt our sales strategy and approach.The first to benefit from an offer is the user of the vehicle who can purchase the car at a special price. The benefits of this approach are mutual: the customer earns an employee who uses the service car responsibly, the employee is motivated, and for us it is efficient because we can integrate in the discount given to him all return costs, vehicle preparation for sale, but also promotion costs.Another channel is represented by natural persons who can purchase vehicles at the end of operational leasing from our car park, online on our website www.automarket.businesslease.ro or on partner sites.On the other hand, our partners, traders have the opportunity to purchase Business Lease vehicles in the auctions we launch weekly on our own auction platform.

2. You have buyers, both legal entities and individuals, don’t you?

Yes, our client portfolio includes all legal entities. The share of sales to individuals is currently about 35% of total used car sales, increasing from the same period last year when we recorded only 25% of sales on this segment.

3. What recommendations do you have for clients buying a second hand vehicle? (What should buyers pay attention to?)

There are several aspects to keep in mind when purchasing a used car: the history of repairs, the damage suffered and their type, the existence of the warranty or an extended warranty if any, the actual mileage -checking any traces of wear that could indicates a modified mileage-, equipment level, type of engine and transmission. Information on the previous use of the vehicle is a plus - the risk of unknown defects is higher if the car ran under difficult conditions - construction, agriculture, distribution versus a car used by a bank employee only in urban areas, for example.It is also recommended that in the absence of a clear history of repairs, a general check is carried out by an authorized RAR service.These are, in fact, the strengths of Business Lease vehicles returned at the end of the contract: a single owner, real number of kilometers, traceability of maintenance and repairs in branded and RAR authorized services.

4. What are the “star-vehicles” in post operational leasing remarketing? (both for individuals and legal entities, if applicable) Are there changes in their options compared to previous years?

The star vehicles in operational leasing are in fact correlated with the mix of cars returned that year. There are years in which contracts with volume vehicles end and years in which we have more returns of premium cars.The brands generally sought after on the second-hand car market remain: VW, BMW, Audi, Mercedes - Benz, Ford, Opel, Skoda, Renault, Dacia, Toyota.Top 5 brands and models sales SH Q1_ 2020RetailTraders1FORD Focus, FiestaFORD Transit, Kuga2MITSUBISHI L200DACIA Duster, Logan, Sandero3Dacia DusterHyundai i204SKODA Octavia, Rapid, SuperbSkoda Octavia5BMW 3 SeriesOPEL Astra, CorsaTop 5 brands and models sales SH Q1_2019RetailTraders1Opel AstraFord Fiesta2Dacia LoganVW Passat, Polo3Ford FiestaHyundai i204Skoda RapidDacia Logan, Duster5VW Passat, PoloAudi A4

5. As the vehicles at the end of the operational leasing contract are well-maintained cars, with a correct history, do you think that, after being sold on the second-hand market, they help to increase the quality of the Romanian car fleet?

The average age of post operational leasing cars is 3,5 years with in average 95 - 105.000 km’s, and the way in which these vehicles are monitored and maintained is a guarantee of their quality. Certainly a higher share of the market would result in an increase in the quality of the car fleet at national level. Unfortunately, however, the share of used car sales from operating leasing is still small, but “step by step” we trust that “We will walk the 100-mile way” .

6. In the current economic conditions, what is the dynamics of the used car market? I mean the one through specialized companies or platforms.

Customers increasingly appreciate the time given to such a transaction and the reduced risk when purchasing a used car from operational leasing, so we are optimistic about the evolution of the used car market in general and that of post operational leasing car sales in particular.The online is the future whether we are talking about auction platforms or specialized sites. We align ourselves to these trends and take consistent steps to update the platforms and increase the visibility in the online. Our results are already visible in the increase in the number of leads from these channels.

7. How do you think this market will evolve in 2020?

The Coronavirus crisis has had a significant impact on the car market, and the consequences of this unprecedented situation are multiple and difficult to quantify and still fully anticipate.One of the consequences we see already is that people started to prefer their own private mobility, instead of using public transport and this means automatically an increase of the second hand car sales. In the Netherlands for example, the month of May marked a record of the best month ever in the sales of ex lease cars. And also in Romania we see a rapid development of our sales especially because of a growing demand and trader stocks which are lowAlso in Romania, Dacia Mioveni and Ford closed their productions in March. All these have generated and will continue to generate delays in deliveries of new cars by at least 2 months.This also contributes to the popularity of used car sales, both in terms of stock availability and investment in a used car compared to a new one.Also, as the flow of imported used cars is currently limited, buyers will focus on authorized companies and operational leasing companies that provide guarantees and investment security.Considering the general context, we believe that the used car market has growth potential, with the premises of a revival in Q3 & Q4.The article was published in Flote Auto.