A recent study conducted by research organization Profundo and commissioned by T&E has revealed a remarkable 59% increase in profits for Europe’s major leasing companies between 2018 and 2022, despite fleet sizes only growing by 5%. The report focuses on the profitability of the seven largest leasing companies in Europe, including ALD | LeasePlan, Alphabet/BMW Financial Services, Arval, Leasys, Mercedes-Benz Mobility/Athlon, Mobilize Financial Services, and Volkswagen Financial Services. In total, these companies amassed a combined profit of €15.7 billion in 2022.
The remarkable profits generated by leasing companies present a unique opportunity for them to drive the transition to electric vehicles. However, the research by T&E indicates that the leasing sector is far from leading the European Union market when it comes to the adoption of electric cars. Notably, none of the leasing companies analyzed in the report have set a definitive phase-out date for polluting vehicles.
Among the leasing companies examined in the study, Arval, owned by BNP Paribas, and Leasys, the leasing branch of Crédit Agricole and Stellantis, experienced the most substantial profit growth since 2018. Arval’s profits skyrocketed by 192%, while Leasys witnessed a remarkable surge of 143%, surpassing the growth rate of its fleet size (82%).
An analysis of Return on Equity (ROE), a key indicator of a company’s financial health, revealed that the average ROE for leasing companies increased from 21.2% in 2018 to an even higher 27.2% in 2022. In comparison, banks, which serve as the owners of some of the largest leasing companies, typically record ROEs between 7% to 12%.
While these leasing companies continue to make substantial profits, their progress in driving the adoption of electric vehicles appears lackluster. Stef Cornelis, the director of T&E’s electric fleet program, highlights the imbalance between their profitability and the pace of electrification. He suggests that leasing companies could easily leverage their strong financial performance to invest in electric vehicles, but it seems that they prioritize maximized profits and cash flow over sustainable transportation.
Additionally, the study reveals a significant increase in profit per car, with an average surge of 53% from 2018 to 2022 for the selected leasing companies. These higher profits indirectly burden customers, resulting in increased leasing costs. The profit per car for Arval stands close to €2,400, while Mobilize reaches approximately €3,200 per car. As a result, mainstream car models like Opel Corsa or Peugeot 208, which typically cost €12,000-15,000 to lease over the duration of the lease period, contribute to these substantial profits. Most families in the EU rely on the second-hand car market, where these leased cars eventually end up, to purchase their vehicles.
The impressive profits achieved by leasing companies are undeniably a testament to their successful business models. However, it is vital to question who bears the brunt of these profit increases. Stef Cornelis concludes by suggesting that if the profit per car continues to rise, it is ultimately the customers who are paying for it, whether through lease deals or second-hand purchases.
Q: Which leasing companies were included in the study?
A: The study examined Europe’s seven largest leasing companies, including ALD | LeasePlan, Alphabet/BMW Financial Services, Arval, Leasys, Mercedes-Benz Mobility/Athlon, Mobilize Financial Services, and Volkswagen Financial Services.
Q: Have any leasing companies set a phase-out date for polluting cars?
A: No, none of the leasing companies analyzed in the report have established a definitive phase-out date for polluting vehicles.
Q: Which leasing companies experienced the most significant profit growth since 2018?
A: Arval (owned by BNP Paribas) and Leasys (the leasing branch of Crédit Agricole and Stellantis) recorded the most substantial profit growth, with Arval’s profits increasing by 192% since 2018, and Leasys’ fleet size witnessing an 82% growth while its profits nearly doubled by 143%.
Q: How much has the profit per car increased for leasing companies?
A: On average, the profit per car has risen by 53% from 2018 to 2022 for the leasing companies evaluated in the study.