Leasing the good life on wheels
20 Sep 2006
Indians are getting upwardly mobile and how! As salaries continue to skyrocket, a craving for the better things in life is only a logical extension of people’s aspirations. So rather than be seen driving around in simple inexpensive cars, CEOs of companies would much rather do the trip around town only if they are provided with gleaming BMWs and Mercedes-Benzes.
According to India’s leading car leasing company, LeasePlan India, companies are slowly veering around to acquiring topnotch models through lease for their top level management. And as more and more luxury brands begin to surface on Indian roads, the writing on the wall is clear. There is a growing preference for expensive leased cars.
Says Veerle Behets, managing director of LeasePlan India, “When I started business in India, the top level car sought was the Opel Astra. Now we see requests for BMWs, Camrys and Mercedes Benzes. I see the trend increasing significantly in the coming years.”
The company has, as part of its lease management fleet, over 300 upmarket cars which include BMW, Mercedes-Benz, Ford Mondeo, Toyota Camry, Prado, Mitsubishi Pajero, Suzuki Grand Vitara, Honda Accord, CRV, Skoda Superb, Hyundai Sonata and Terracan.
“A couple of years ago, we did not have a single Mercedes in our fleet but now have quite a few. We also have BMWs coming in. SUVs like the Ford Endeavour, Grand Vitara and the Honda CRV are also in demand,” she adds.
It is also her view that once Audi, Volkswagen and BMW begin manufacturing vehicles, they will obviously become more affordable and sought after.
LeasePlan India crossed 10,000 cars in end-June 2006 and has internally fixed a target of 50,000 cars by 2010 or so. It recommends what models companies should go in for based on the kind of use. Hence, SUVs would be the best bet if it means travelling in the interiors often. Similarly, fuel options are also decided based on the quantum of use. LeasePlan India is associated with nearly 700 car dealerships which become a critical link in its operations given that it caters to a large section of corporates.
“We do not want our customers to drive very far to reach a dealer and adding outlets is an ongoing process for our operations team,” Behets says. The company started its own rentals scheme in April. This helps in providing replacement cars should the new leased car take a long while to be delivered. “We rent cars out for a couple of days to a month or even a year. Here, we decide on the fleet that we want. In leasing, we really buy the car for the company and it is finally their choice,” she adds.
LeasePlan Rental operates in Delhi and Mumbai with a fleet of around 30 cars.
The average life of the company’s vehicles is around 42 months and typically can vary from three to five years. They are then returned only to be sold. LeasePlan India has dedicated cells in Gurgaon and Mumbai for selling retired cars. While 15 cars are sold every week in Gurgaon, the pace is quickening.
The company also works with secondhand car dealers and companies’ own secondhand car business. “All our cars have good value for money because we maintain them well. We know this part of the business will also increase,” she reiterates. LeasePlan India has for long been discussing with Coca-Cola to manage its fleet of commercial vehicles. However, talks have now been put on hold after it figured out that the commercial vehicle segment was not the most viable business proposition.
“We also had a good look at these trucks and decided against pushing for it. The trucks were not in good condition. What you generally see on the roads is not really roadworthy and when there is still such huge potential in the car market, it does not make too much sense entering the high-risk commercial vehicle segment,” Behets says.
Before 2000, the company was in gthe trucks business in a whole lot of countries but has gradually stopped. This activity is now confined to a few parts of the world. "I am not blaming Coca Cola because a part of its fleet is also outsourced," she adds.
The other apprehension about commercial vehicles could stem from the fact that India ranks among the highest worlwide for road accidents involving trucks. “There are cases of drivers running away from the scene of the accident. In Europe, drivers have to rest compulsorily after driving for a few hours. Their eyesight and reflexes are also tested periodically. Nothing of this sort happens in India. In Germany, you can see a lot of trucks parked by the side of highways on Sundays because it is their day off,” Behets says.