Car Leasing - Emerging Opportunity in India

• Offering employees, often at senior managerial levels a company car is now becoming an important motivation and retention tool for HR managers. 
• Public companies and banks have been since long giving this service to senior employees with the car value changing with the seniority. 
• Most of these companies buy cars and give them to employees, thus generating a 'corporate fleet'
• Now, the things are changing as leasing of corporate fleet is coming into picture. 
• Talking of numbers, around 32% of large companies in India, Brazil, Russia and Turkey are going for leasing of corporate fleet. 
• Around 2.5 million cars are sold in a year in India. 300,000 are bought by corporate. 
• Presently the car leasing companies in India are buying around 30,000 cars - just one tenth of what corporate is buying. Thus leaving a huge gap and opportunity
• Car leasing companies like LeasePlan expect 13 - 18% annual growth rate
• In a car leasing arrangement, the monthly rental comes lower than the EMI you would pay if you took a loan. 
• You have to pay the maintenance and insurance but there is no down payment involved thus saving capital. 
• There are 2 benefits for companies. One, the vehicles are off balance sheet and secondly, it is considered as expense and hence saves on tax. 
• Challenge is the evaluation of residual value of the car. In more mature markets, there are firms to calculate the residual value of the cars and lease companies use them to work out the terms and conditions. 

Source: http://businessworld.in/businessworld/businessworld/content/Wheels-Lease.html