Romanian Leasing Market Could Rise 10% In 2009

The leasing market in Romania could grow 10% in 2009, which is similar to the figures for 2008, amid turbulence on international markets and a decline on the car leasing and property leasing segments, said Bogdan Apahidean, CEO of LeasePlan Romania, quoted by NewsIn. "For this year, we estimate that the overall leasing market will reach a bit over 5.5 billion EUR, up by approximately 11% from 2007," he added.

In his opinion, the performance of the market in 2009 depends on the leasing companies" capacity to attract financing. "Property leasing will be the most severely affected segment. However, this segment only accounts for 10% of the market. The second to be affected will be the car leasing segment, which accounts for 70% of the market," Apahidean added.

Leasing companies need to be very careful with their costs during the crisis and to avoid making investments that have small changes to develop next year, he believes. In his opinion, certain customers, especially companies, may no longer be able to pay their instalments towards their leasing contracts following a decrease in their own business. Apahidean believes that even solid customers may be affected by the countrywide decrease in consumption and therefore have to brake their business development.

Operational leasing markets up over 100% in 2008-12-01

Referring to the performance of the operational leasing market at a time of crisis, Apahidean believes there could be two distinct trends in the customers" preferences, which have so far manifested rather mildly. One is that some customers prefer to do something else with their money, rather than buy cars, so they would opt for operational leasing and fleet management services. The other is that customers are not making any decision yet, waiting to see how the crisis develops.

According to Apahidean, the companies that have car fleets and want to expand are currently confronting liquidity problems as a result of the financial crisis, so operational leasing could be a way to cut costs. "Companies can reduce expenses related to the maintenance of a car fleet by using operational leasing services," said Apahidean, adding that the operational leasing market had advanced by more than 100% in 2008 and still had great growth potential for 2009. "Considering that the operational leasing market currently accounts for about 6% of the overall leasing market, there is a good potential to see an increase towards 10% by the end of 2009," he added.

LeasePlan"s intention for 2009 is to more actively inform customers about the benefits of fleet management and explain to them that it is better to pay for the use of a vehicle, than to buy it and pay for the maintenance, too. "Cars are fixed assets that lose their value quite rapidly," he added. In 2007, the overall value of the goods leased in Romania advanced by 51.6% to 4.94 billion EUR. In the first nine months of this year, the leasing market gained 29.7% to 4.29 billion EUR, compared to a 42% increase in the first three quarters of 2007. Nevertheless, the effects of the severe decline in car sales could become visible as of October.

LeasePlan Romania intends to make profit as of 2011, after a two-fold annual increase of their fleet

The Romanian subsidiary of the Dutch-based operational leasing company LeasePlan Corporation estimates to have a fleet of 2,500 vehicles by the end of 2009 and to start making a profit in 2011, after doubling the fleet annually, according to CEO Bogdan Apahidean. "For this year, we estimated roughly 1,100 vehicles, but we exceeded the target after 11 months. The total for 2008 will probably exceed 1,200 vehicles. We should start making a profit in 2011, after doubling the fleet on an annual basis, he added.

"We managed to exceed the target for this year thanks to the sales force, who explained well the advantages of this type of product. In 2009, we intend to improve our relationship with our suppliers who play a very important role in the quality of service," Apahidean added, upon estimating 8 million RON in turnover by the end of the year.

LeasePlan Romania was established in March 2007 and became operational in September 2007, after an initial investment of 1.3 million EUR. The company is part of the Dutch group LeasePlan, which is controlled by Volkswagen Group (50%), Mubadala Develpment (Abu Dhabi, 25%) and Olayan Group (25%).