operating leasing and fleet management: russia and cee
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Operating leasing and fleet management:
Russia and CEE
2-3, February, 2012, PragueSergey Dianin, Arval Russia
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Content
■ Automotive markets
■ Leasing markets
■ Some specifics
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■ Automotive markets
■ Leasing markets
■ Some specifics
Population
145
4538,5
21,510,5 10 7,6 5,4 3,4 2,3 2 1,3
Data source: E&Y, ACEA, EEA
Car sales, country fleet and age of fleet
Fle
et ave
rage
age
Sales, 1000
Size of bubble = Country fleet, mln
Data source: E&Y, ACEA, EEA, Datamonitor
2 65312 35010050 200
Bulgaria 2,9
Hungary 3,4
Lithuania 1,6
Poland 19,7
Slovakia 1,6
Russia 39,1
Czech Republic 5,1
Estonia 0,6
Latvia 0,8
Romania 4,9
Slovenia 1,0
Ukraine 8,2
5
7
9
11
13
15
17
Growth of total fleet and registrations 2010 -> 2011
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-10%
0%
10%
20%
30%
40%Czech Republic
Hungary
Poland
Romania
Slovakia
Russia
grow th of f leet
grow th of sales
Data source: Datamonitor; CVO
Number of cars per 1000 of population
485 473436
386 386357 342
294244
214180
158
Data source: E&Y, ACEA, EEA
Average Europe = 508
Market leaders in car sales
Country Market Leaders
Bulgaria Hyundai; Toyota; Peugeot; VW
Czech Republic Skoda; Ford; VW; Renault
Estonia Toyota, Mazda, VW, Peugeot
Hungary Suzuki; Ford; VW; Opel
Latvia VW; Toyota; Nissan; Skoda
Lithuania VW; Nissan; Peugeot
Poland Fiat; Skoda; VW; Ford
Romania Dacia (Renault); Hyundai; VW; Ford
Slovakia Skoda; Renault; Peugeot; Kia
Slovenia Renault; Citroen; VW; Opel
Ukraine Lada; Toyota; Hyundai; Renault
Russia Lada; Chevrolet; Hyundai; Renault
Data source: E&Y, ACEA, EEA
Business fleet and business registration
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Bu
siness
registratio
ns
Business fleet
Hungary9,5%
Poland5,1%
Russia5,6%
Czech Republic8,4%
Romania20,1%Slovakia
14,0%
-
50
100
150
200
250
- 500 1 000 1 500 2 000 2 500
Size of bubble = share of business
fleet in total country fleet
Data source: Datamonitor; CVO
Growth of business fleet and registrations 2010->2011
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-10%
0%
10%
20%
30%
Czech Republic
Hungary
Poland
Romania
Slovakia
Russia
grow th of companies'f leet
grow th of businessregistrations
Data source: Datamonitor; CVO
Average duration of fleet usage by
58
6964
54
Data source: CVO
Passenger Cars
Light Commercial Vehicles
6978 84
63
Cost pressure on the company fleet by
0%
-14%
-12%
-11%
51%
30%
23%
48%
Data source: CVO
IncreaseDecrease
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■ Automotive markets
■ Leasing markets
■ Some specifics
Business fleet breakdown by financing mode
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1%3%13%9%8%6%
0%
25%
50%
75%
100%
Hungary Slovakia Poland Czech Republic Romania Russia
OP FL FSL
Data source: Datamonitor; CVO
18%14% 14%
28% 18%5%
0%
25%
50%
75%
100%
Hungary Slovakia Poland Czech Republic Romania Russia
OP FL FSL
Business registrations breakdown by financing mode
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Data source: Datamonitor; CVO
Poland9,4%
Czech Republic12,8%
Hungary6,1%
Romania2,9%
Slovakia8,2%
Russia1,1%
-
5
10
15
20
25
30
- 20 40 60 80 100
Full Service Leasing: fleet, registrations, penetration
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FS
L reg
istration
s
FSL fleet
Size of bubble =
FSL penetration
Data source: Datamonitor; CVO
Average duration of leasing usage by
59
74
58
4147
57 53
42
Data source: CVO
Passenger Cars
Light Commercial Vehicles
65
86
68
4552
61 63
48
Finance leasing
Operating leasing
Expected growth of FSL fleet 2011->2015
124,8%
73,5%
47,4%
31,5%22,7% 22,1%
Data source: Datamonitor
Expected growth potential in next 3 years:
-3%
-1%
-5%
-10%
49%
42%
8%
24%
Data source: CVO
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■ Automotive markets
■ Leasing markets
■ Some specifics
What is really different
1) Fleets to be managed in the territory of 17,075 mln sq. km,
which is over 10 000 km long and 4 000 km wide,
located in 2 continents: Europe and Asia,
with the northern point in 900 km from the North Pole
Territory of Russia = 15 times territory of all CEE Countries
2) 11 time zones from GMT+2 to GMT+12
3) 4 climate zones, temperature varies from +42°C in the South to -68°C in the North
4) Multi-currency environment: RUR, EURO, USD and relatively high inflation (8-9%)
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Full Service Leasing in Russia
■ 2000■ first supply of the product tin Russia; less than 1000 vehicles in fleet■ 2-3 suppliers
■ 2011■ Fleet of 26 000 vehicles ■ 2 international, 2 foreign, ~12 local players, 2-3 international short term rental
companies■ 3-5 suppliers in Fleet management■ 1 fleet consultant
■ In comparison with Finance leasing■ Over 1000 leasing companies■ ~ 55 specialize in automotive leasing■ Fleet of approx. 200 000 vehicles
Global maturity level of Full Service Leasing
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0 = high immaturity1 = slight immaturity2 = low maturity3 = medium maturity4 = high maturity5 = total maturity
The most mature market is UK, maturity level = 4,56
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
CzechRepublic
Poland Slovakia Hungary Romania Russia
2011 2015
Data source: Datamonitor
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24
Low maturity results in 1) Product
■“Young” product with awareness of below 6%
■Lack of statistics
■Operational leasing does not exist in the Russian Law and is treated by the Law as a rent
■Results in:■Low knowledge of product - misunderstanding of what is Full Service Leasing, Operational
Leasing and Finance Leasing
■For example - perceiving net finance lease or creative finance lease as full service lease
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25
Low maturity results in 2) Clients
■Strong habit to own: 99% of corporate fleet is in ownership ■Historical reasons
■Out of priority for top management
■Natural resistance of existing fleet organizations
■Exaggerated demand for number of services and level of quality
■Over-estimation of the product and leasing company capacities
■No clear vision of own costs and expenses allocated to own fleet
■User (Driver) doesn’t know how to use the product
■Company Car Policy doesn’t consider outsourcing solution
■Results in:■Lack of trust
■Dissatisfaction with the product or supplier
■High orientation to price
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26
Low maturity results in 3) Infrastructure & Suppliers
■Low density of service suppliers – 1 authorized dealer per 5300 sq. km (average)■Equivalent of having 15 dealers in Czech Republic
■Absence of national networks■37 OEM represented by 3273 authorized dealers
■Low maturity of service suppliers in terms of business relationships and partnerships
■Results in: ■Limited geographical availability of services
■Low competition and monopolistic position in some regions
■Long lead times for vehicles and spare parts delivery
■Low quality of services
■Need in intensive suppliers management
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27
Low maturity results in 4) Leasing suppliers
■Low number of Full Service Leasing suppliers■We don’t have enough hands to move the market faster
■Lack of communication and co-operation between leasing companies
■Absence of Operational leasing association ■Separated, we don’t have enough power to change the market faster
■Results in:■Price wars in the tiny market
■Slow development of industry
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3 major objections of Companies to Full Service Leasing
■ “Leasing is by far more expensive”
■ “Quality will certainly be lower”
■ “I do not control the situation”
Is it very different from other countries?
To remind you…. Expected growth of FSL fleet 2011->2015
124,8%
73,5%
47,4%
31,5%22,7% 22,1%
Data source: E&Y, ACEA, EEA
The most promising marketThe most promising markets
Operational leasing and fleet management in Russia and CEE:
Similar roots
Different stages of development
Huge potential
Thank you!
ArvalSergey Dianin
General Manager for RussiaTel: +7 (495) 644-2270
www.arval.com
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