Leasing or lending cars during the war?

Leasing or lending cars during the war?

The leasing market is starting to recover, we are seeing more and more customers interested in getting new cars. As a rule, many large corporate companies renew their fleets every 4-5 years. But under the influence of events related to the pandemic, and then to the war, they were forced to extend the leasing agreements. Anastasia Myronenko, who heads the regional sales department of Avis Ukraine, explains the state of the leasing market in Ukraine and outlines its prospects as of May 2023.

Compared to 2022, when many companies suspended or curtailed their operations, the current year is marked by a resumption of financing for auto leasing. Leasing companies, with the exception of one or two, did not buy new cars last year. Despite the difficult circumstances, AVIS Ukraine did not limit its activities and continued to finance new deals. A few days after the beginning of the military aggression, it took us to relocate the central office to the west of the country, but after a week we were able to resume the provision of services. We continued to issue cars to customers. It was also possible to finance the purchase of cars by them in accordance with all the concluded contracts. Exceptions were cases when the clients themselves refused to leasing a car. Last year, our company fulfilled the car supply plan by almost 70%.

cars for leasing during the war

Leasing or lending

Compared to lending, which is currently almost non-functional, leasing services continue to be provided. Financing is carried out by leasing companies affiliated with banking institutions, institutions that have the opportunity to allocate funds from parent companies or were able to continue investing in leasing and their own funds, and are attracted from the banking sector, as our company AVIS Ukraine managed to do. Considering the fact that, despite the difficult economic situation, we continued to fulfill all our financial obligations, partner banks did not close credit lines for us last year, although they could use the legal opportunity to postpone payments.

Leasing cars during the war

Practically all companies engaged in leasing activities faced the problem of early return of cars at the beginning of the military aggression due to the uncertainty of the situation in Ukraine. But since the fall, some of our customers, who previously returned cars, began to conclude deals again. There was also a 5% increase in our customer base due to customers being forced to turn to us due to the inability of their main partner to finance their current leasing contracts. And we had stable financing and were ready to provide services to new clients.

Leasing became available for individuals as well

Today, 99% of our leasing agreements are concluded with legal entities, but last year we opened the operational leasing project AVIS MAX, which can be used by individuals. We will be happy to see an increase in the volume of leasing agreements with this category of clients.

Delayed demand for car leasing

The composition of car fleets is aging, cars need to be replaced, so we are observing the build-up of pent-up demand. Currently, tenders aimed at replacing large car fleets are taking place. As for our company, last year we provided support to our clients, attracted new ones, opened a project for the organization of leasing to individuals, and ended the year with a profit. AVIS Ukraine is considering ambitious development plans in the future. Our investors are confident in the future of Ukraine and hope for the continuous development of our company after the victory.

What about cars that were seized during the war

All leasing companies were forced to write off the value of cars that were confiscated during the war. Some companies have large losses because of this, but they have not reached bankruptcy. Despite the fact that we also had to write off part of the assets, AVIS Ukraine ended the year with a profit higher than that of all competitors.

Leasing conditions during the war

Due to the pandemic and shortage of semiconductors, car production has decreased, the war has added logistical problems, so there is a certain shortage, and the prices of all cars have increased. Financing rates have also increased, so the cost of leasing for customers has increased. Regarding customer requirements, our company has not changed the terms of service provision, we do not require additional guarantees compared to the terms that were in effect before the war. But there are cases on the market when other leasing companies have increased requirements for customers and the parameters of leasing agreements.