Is it worth leasing at the end of 2022?

What is leasing?

Translated from English, leasing is rent. In this way, the customer does not receive a car, but the right of use with subsequent right of purchase. The lessor, the lessee and the bank (intermediary) are involved in the transaction.

This form is more suitable for legal entities that form entire fleets with the help of leasing. But in some cases private individuals also use leasing, because this can be cheaper than a loan. For example, if there is not enough money for the deposit, a large loan “hangs”, there is not enough time … Car registration, insurance, tax payment, maintenance and even a seasonal tire change are all concerns of the landlord, if interested, a attract and retain customers.

Where is the market going?

According to the analytical agency Avtostat, Russian car leasing started growing in the fall of 2021 after several months of continuous decline related to the pandemic. In the largest segment – passenger cars – the number of lease transactions increased by 8%, in freight transport by 17% and 2.7 times more buses were leased.

And only in the LCV segment (light commercial vehicles) the dynamics were negative (-6%). The reason is the downtime of factories and the physical absence of finished machines. And the demand in this segment has been maintained.

Overall, 2021 was a successful year for the Russian lease market. 410,415 contracts were signed, 38% more than in 2020. And the biggest decrease was in 2019.

In the first eight months of 2022, 149.0 thousand cars were leased, according to the National Industrial Information Agency (NAPI), 33.3% less than in the same period last year. But the difference with last year, which was 40.7% in seven months, is narrowing. However, it is unlikely that the gap will have narrowed completely by the end of the year.

What has changed in 2022

The scarcity of new vehicles and rising prices have made cash purchases problematic, with leasing becoming the only alternative. Customers realized that the ‘new reality’ was long and serious, and no longer waited for an improvement in the economic situation.

Which cars are currently being leased?

The Russian car market has changed rapidly and dramatically this year. The share of the Russian car industry has increased from 20% to 35%, which is very significant. But even more striking is the increase in the share of Chinese car brands – from 5% to 26%! And despite the fact that the leaders in the top 10 passenger cars in the Russian market have not (yet) changed, three brands from China (Chery, Haval. Geely) have already entered the top ten. Moreover, if Chery Tiggo 7 PRO’s sales volume grew by 26.3%, Haval Jolion simply has fantastic growth (+240.7%)!

The correlation with the car market is direct: the same bestsellers are leased. One of the goals of leasing is to buy a car (possibly with resale). And there are more cars of domestic (Russian) production and Chinese brands (including local assembly) in leasing. Interest in used cars has also grown.

Expert Commentary

Lilia Markova, CEO of Gazprombank Auto Leasing:

– The firm leader in the passenger segment – Lada – maintains its position at approximately 15% of the total volume of leased vehicles in this category. The top five popular brands also included Kia (8.7%), Mercedes-Benz (7.4%), Toyota (7%), Hyundai (6.2%), but their positions have deteriorated noticeably.

While the share of Chinese brands in leasing was around 9.7% in January, it was already 26.3% in September and the used car share doubled to 26%.

It is noteworthy that, despite the lack of equipment, Chinese players are willing to offer corporate customers discounts of up to 19% of the cost of the car – due to the desire to seize the moment and seize their share of the vacant niches.

The crossover segment is still growing. They are becoming increasingly popular among tenants. And here too, Chinese brands “rule”. You must have noticed how many of the same Haval Jolion got in the taxi. But these are cars bought on lease.

Expert Commentary

Denis Kokoroshkin, Alfa-Leasing, passenger car expert:

– Talking about the new passenger car market, we can note the crossover segment, which has traditionally been popular with consumers. It is in it that Chinese brands develop their product line and compete with a solution known in our market.

But we are also waiting for the appearance of alternatives in the B-class sedan segment, such as Solaris, Rio, Polo and Rapid, in the price segment from 1,200,000 to 1,600,000 rubles.

An important trend is the growth in the share of used car transactions: here we are developing the premium brands segment and meeting the needs of the taxi business.

Are there trucks?

In contrast to the passenger segment, there was no significant decrease in the freight segment in 2019 either: demand for leasing grew in both 2020 and 2021 and is now continuing. But leasing companies had to refocus from European trucks to Chinese or used cars.

Here is a typical example of Ekaterina Adushkevich, head of the department for working with banks and leasing companies of Profit Finance LLC (part of the financial and industrial group Profit): a MAN TGS 4 * 2 main tractor cost 7-8 million rubles in 2019 , in 2022 – 14 million, while its counterpart SITRAK C7H will cost from 7 to 9 million rubles. A comparative test drive shows that there are flaws, but it is a worthy competitor.

SHACMAN, HOWO (analog to MAN), SIAC Iveco, FAW enter the freight market well. They sell well, gladly with price and quality. And some leasing companies have special offers and subsidies for Chinese equipment. It becomes a priority.

Which documents are needed?

Last year, leasing companies actively switched to electronic document management (EDF) using an electronic digital signature (EDS). You can also take out a finance lease online without leaving the office. The workflow has also been greatly simplified by self-service via a personal account. Here you can not only request closing documents for payments made, but also, for example, request debts for traffic police fines.

To increase the attractiveness of transactions, landlords reduce the package of documents. For legal entities, express approval is exercised on the organizational chart, without financial analysis.

Some companies prepare transactions using two documents: the passport of the head of the organization and the lease of the office, or a copy of the passport and TIN.

The standard set of documents for handling a lease transaction for individuals also includes:

• passport and driver’s license
• income statement of the last 6 months
• certified copy of workbook
• confirmation of registration or temporary registration

What will happen in 2023?

Vasily Lobov, an independent expert, offers his realistic prediction. In his view, the car leasing market in Russia is waiting for another cut in key rates and an increase in leasing demand in 2023

• At the same time, the number of car dealers and leasing companies will decrease.
• Car prices will continue to rise due to inflation and devaluation
• New programs from the Ministry of Industry and Trade to support the domestic auto industry, adopted in September 2022, will increase demand for Russian cars.

According to experts, the number of leasing companies in the country will decrease by a quarter in 2022-2023 to 360-380 (now there are 566 leasing companies in the country), and the ten largest will take 70% of the market. At the same time, the demand for leasing will increase, especially from the second half of next year.