1

THE EUROPEAN FLEET LEASING:

Key trends and challenges, and what they teach us for the development of the CEE markets

Presented by Vincent Rupied, Prague, February 3rd, 2012

2

Leaseurope, the Leasing & Rental Federation

Leaseurope brings together 43 associations in 31 countries throughout Europe

Leaseurope represents the leasing industry, from hire purchases and finance leases to operating leases of all asset types, as well as short term rental, for cars, vans and trucks.

3

The Corporate Vehicle Observatory

Free Access Studies

Annual Fleet Barometer in collaboration with

An expert-platform for all fleet professionals:

fleet managers, procurement specialists, manufacturers, fleet leasing companies, advisers, insurers, press, public authorities, researchers etc.

Created by Arval in 2002

Focus: professional Mobility

Neutral & International16 Countries

incl: Czech Republic, Russia, Poland

4

Agenda

1. Automotive fleets in the European Leasing Market

2. Full Service Operating Leasing in Europe

3. Trends & Challenges

5

Machines & equip

Cars

CVsICT

Big/other

Real estate40%

16%

Leaseurope in the automotive market (2010)

6

Source: Leaseurope estimates based on data collected in its 2009 Annual Survey and ACEA new registration figures

Leaseurope passenger cars as % of total car registrations

0%

10%

20%

30%

40%

50%

60%

70%

SE

CH EE

DK FI

LV NL

UK

BG

HU SI

SK

AT PT

CZ

FR

NO

DE

BE

RO PL

ES IT

GR

Leasing & ST rental membersLeasing members

25.4%

Leasing & Car Rental penetrations

7

European Leasing & Rental Volumes

Leaseurope Annual Survey

8

0

150

300

450

600

750

900

1 050

1 200

1 350

0 300 600 900 1 200 1 500 1 800 2 100 2 400 2 700 3 000 3 300 3 600 3 900

BUSINESS REGISTRATIONSThousands of units

TOTAL REGISTRATIONSThousands of units

Germany

France

United Kingdom

Brazil

Italy

Spain

India

Belgium

Turkey

Russia

Netherlands

Poland

Austria

Switzerland

Portugal

Czech Republic

Romania

Slovakia

Greece

Hungary

Luxembourg

Morocco

Business vs. Total Registrations

2011*

Size of bubbles =

Business registrations

Sources: Arval, National Associations, ACEA.

* For all countries, best estimate to date.

9

24%

68%

49%

73%

56%

10%

6%

3%

5%

4%

EU

BR

RU

IN

TU

IncreaseDecrease Balance 2011

+ 14%

+ 62%

+ 46%

+ 68%

+ 52%

+ 13% - 2% + 21%

2010 2009 2008

Base: companies > 100 employees

Fleet growth potential in the next three years

10

Agenda

1. Automotive fleets in the European Leasing Market

2. Full Service Operating Leasing in Europe

3. Trends & Challenges

11

Target: Fleet managers in companies of all industries using corporate vehicles

Fieldwork period: H1 2011

Sample: 4 518 interviews including

3 313 in Europe : Belgium, Switzerland, Czech Rep., Germany, Spain, France, Greece, Italy, Poland, Portugal, UK

1 205 in “BRIT” : Brazil, Russia, India, Turkey

Companies with less than 10

employees

Companies with 10 to 99 employees

Companies with 100 to 249 /

499 / 999 employees

CompaniesWith 250 / 500 / 1 000 employees

and +

Note : CVO Barometer Methodology

12

Fleet financing in European Large Corporates**

Operating leasingFinance leasingCar creditSelf purchase*

*Self-purchase = outright purchase + credit (other than car credit) ** Large Corporate = over 1000 or 500 employees

RU

13

Intention to develop – Intention to reduceIntention to develop – Intention to reduce

Operating leasing

Finance leasingCar creditSelf purchase*

*Self-purchase = outright purchase + credit (other than car credit)

Fleet financing: intentions per size

14

The Motivations forFull Service Fleet Leasing

Outsourcing of services and administration

Transfer of risk on maintenance and Residual Value

Budget control

Don’t know

Besides the cost, what is the main added value of your experience with your leasing supplier?Besides the cost, what is the main added value of your experience with your leasing supplier?

Base: companies using Operating Leasing

15

% of businesses interested in the following services% of businesses interested in the following services

A Market driven by Service Outsourcing

16Base: companies with 100 employees and more

Don’t know

Integrated provider of services only

Best specific provider for each service

Integrated provider of both services and leasing

% who cover service needs with…% who cover service needs with…

Towards Service Integration

17

Agenda

1. Automotive fleets in the European Leasing Market

2. Full Service Operating Leasing in Europe

3. Trends & Challenges

■ Leasing in crisis time

■ The funding challenge

■ Remarketing and residuals

■ Accounting treatment

18

Leasing in crisis time:back ground

19

IncreaseDecrease

Balance 2011

% who think that this year, cost pressure on the fleet will…% who think that this year, cost pressure on the fleet will…

31%

36%

37%

39%

Leasing in crisis time: Cost pressure

20

The funding challenge (1/2)

CDS 5Y €

RCI

SG

BNPP

VWBMW

21

BMW

VW

BNPP

RENAULT

PSA

DAIMLER

SG

FIAT S.P.A.

Feb 1st

The funding challenge (2/2)

22

The Remarketing Challenge (1/4)

23

80.0

85.0

90.0

95.0

100.0

105.0

110.0

115.0

120.0

Used cars Linear (Used cars)

France : LT Used car market index (100 = average Jan. 2007 - Mar. 2008)

The Remarketing Challenge (2/4)

24

Used cars market: size per country

Sources: Arval, National associations, ublic statistics.

The Remarketing Challenge (3/4)

25

Used cars sales vs new cars sales

Sources: Arval, National associations, ublic statistics.

The Remarketing Challenge (4/4)

26

The Lease accounting challenge (1/4)

A difficult conception

Rediscussions

27

• Overall complexity, low preparation

• Will the leasing charge be

degressive (as proposed)

or constant (as today)?

• Feasibility of recontracting

• Qualification of the Right of Use for Basel II and III (for banks)

Tangible,

Intangible

or a new class of assets (« financial intangible ») as proposed by Leaseurope?

• Transition : possible option

Full Retrospective: FTA, impact on equity, comprehensive recalculation

Prospective: frontloading of charges with contacts regarded as new

At stake for Leasing Customers

The Lease accounting challenge (2/4)

28

• Substantial system adjustments to produce required reports

• Major uncertainty of the RV reassessment under the new standard

The Lessors would carry receivables – not vehicles – on the balance sheet

The current gradual prospective depreciation (IAS 16) does not apply to

financial assets

The only possible reassessment would be the impairement of the receivable

(IAS 39) and of the residual asset (IAS 36) : more brutal and procyclical

At stake for Fleet Lessors

The Lease accounting challenge (3/4)

29

• Only full service product

• Only mode providing RV risk coverage

• Far lighter on balance sheet than Finance Lease and Purchase

Why Operating Leasing remains by far the best funding for fleets

The Lease accounting challenge (4/4)

30

Thank You