Challenges and Growth Prospects for the Operational Leasing Market in Russia

Challenges and Growth Prospects for the Operational Leasing Market in Russia

Introduction

In a recent survey carried out by Datamonitor, major international leasing and fleet management companies in Russia rated quality and reliability of suppliers as the single most serious obstacle to business growth. This report by Datamonitor brings you an insight into the growth restraints for the operational leasing market in Russia; its current size, competitive landscape and growth factors.

Scope

*As the aftersales network in Russia lags behind the fast-growing car parc, this affects the quality and speed of repairs for leased fleets.

*Despite some difficulties, a few dare to ignore the fastest growing car market in Europe, the least of all major international leasing companies.

Highlights

There is no doubt that it is the foreign direct investments that will be the main source of growth for the operational leasing market in Russia in the next few years, or until local companies and the public sector become familiar with what is essentially a very new concept to local fleet operators.

Reasons to Purchase

*Brings you insight into the challenges leasing companies are facing in a new operational leasing market;

*Provides overview of the competitive landscape in Russia's operational leasing market, as well as the factors driving the growth;

Overview 1
Catalyst 1
Executive Summary 2
Table of Contents 3
Table of figures 4
Underdeveloped Aftermarket slows Growth of Operational Leasing Market 5
Problem Genesis: Aftermarket Network Lags Behind Expanding Car Parc 6
Regional Disparity in Dealership Coverage 9
Lessors Extremely Unsatisfied with Accident Management Service 19
High Accident Rates Stretch Downtimes 20
Tyre Management Suppliers and Specialist Services 22
Fuel Cards Are Not Ubiquitous, but Market is Developing Rapidly 25
Managing Customer Expectations in Face of Supplier Difficulties 27
Regional Presence Only Way to Guarantee Quality of Service 28
Other Growth Restraints in Operational Leasing Market 29
Fleet Management Outsourcing Low on Management Agenda 29
Tax Treatment Favours Finance Leasing 29
Booming Demand from Private Buyers Squeezes Fleet Discounts 30
The Challenge of Re-Marketing in Unorganised Used Car Market 31
Effects of Global Credit Squeeze on Russia's Leasing Market 31
Current Operational Leasing Market Size and Growth Expectations 32
Competitive Landscape in Operational Leasing Market 34
Potential Entrants 35
Main Growth Factors for the Operational Leasing Market 36
Booming Economy Needs to Sustain Its Growth 37
Foreign Investments Drive Demand for Operational Leasing 39
More Employees - More Company Cars 42
Company Cars as Tools in Competition for Skilled Labour 44
Medium and Small Fleets Account for Majority of the Market 45
IPOs to Boost Demand for Operational Leasing 46
Conclusion 48
APPENDIX 49
Ask the analyst 49
Datamonitor consulting 49
Definitions 49
Disclaimer 50
List of Figures
Figure 1: Significance of Growth Restraint Factors in Russia's Operational Leasing Market, 2008 6
Figure 2: Car Parc Growth in Russia and Moscow, 2000-07 7
Figure 3: Car Parc Growth in Russia, France and Germany, 2000-06 7
Figure 4: Car Parc per Dealer Ratio in Russia, France and Germany, 2007 8
Figure 5: Adjusted Car Parc per Dealer Ratio in Russia, France and Germany, 2007 9
Figure 6: Distribution of Total Passenger Car Parc in Russia by Federal Region / City, 2007 10
Figure 7: Share of Foreign Makes in Car Parc by Region, 2007 11
Figure 8: Distribution of Foreign Make Passenger Car Parc in Russia by Federal Region / City, 2007 12
Figure 9: Share of Federal Regions / Cities in Russia's Population, Total Car Parc and Foreign Brand Car Parc, 2007 12
Figure 10: Number of Franchised Dealers in City of Moscow by Brand, May 2008 13
Figure 11: Number of Franchised Dealers in City of Moscow by Brand, Relative to the Estimated Car Parc, May 2008 14
Figure 12: Car Parc per Dealer Ratio in City of Moscow by Brand, May 2008 15
Figure 13: Franchised Dealership Coverage in Russia by Brand, May 2008 15
Figure 14: Full-Service Operational Leasing Passenger Car Fleet in Russia by Brand, End 2007 16
Figure 15: Number of Franchised Dealers in Moscow and St. Petersburg by Brand, Relative to the Estimated Full-Service Leasing Fleet, End 2007 17
Figure 16: Franchised Dealership Coverage in Russia by Brand and Region, May 2008 18
Figure 17: Satisfaction of Leasing Companies with Suppliers of Fleet Management Services, Russia vs Western Europe, 2007 19
Figure 18: Penetration of Fleet Management Services in Russia's Operational Leasing Fleet, 2007 20
Figure 19: Number of Registered Road Accidents in Russia Involving Injury or Death, 2000-06 21
Figure 20: Identified Tyre Procurement Patterns by Leasing Companies in Western Europe 22
Figure 21: Leading Tyre Manufacturer Operated Fast Fit Networks in Russia, Presence and Growth 23
Figure 22: Franchised Outlet and Chains Share of Fast Fit Centres in St. Petersburg, 2008 24
Figure 23: Estimated Demand for New Tyres by Operational Leasing Companies in Russia, 2005-2012 24
Figure 24: Operational Leasing Share of Total Tyre Sales in Russia and Western Europe, 2005-2012 25
Figure 25: Popular Fuel Cards in Russia 26
Figure 26: Major Fuel Card Providers in Russia According to Size of Filling Station Network, 2007 27
Figure 27: Estimated Company Car Sales in Russia as Share of Total New Car Sales, 2005-2007 30
Figure 28: Growth of Operational Leasing-funded Company Car Fleet in Russia, 2007-2012 32
Figure 29: Current Stage of Development of Russia's Operational Leasing Market 33
Figure 30: Current Stage of Development of Russia's Operational Leasing Market, Relative to Other European Markets 33
Figure 31: Competitive Landscape in the Operational Leasing Market, 2007 35
Figure 32: Geographic Coverage of Europe's Largest International Lessors vs Their Presence in Russia, 2007 36
Figure 33: Growth Factors in the Operational Leasing-funded Company Car Fleet in Russia, 2007-2012 37
Figure 34: Real GDP Growth in Russia (in Millions US Dollars), 2000-2012 38
Figure 35: Share of GDP in Russia by Industry Sector, 2007 38
Figure 36: Foreign Direct Investments in Russia (in Millions US Dollars), 2000-2007 39
Figure 37: Foreign Investments in Russia by Industry Sector, 2007 40
Figure 38: Segmentation by Industry Sector amongst Sample of International Companies Utilizing Operational Leasing in Russia, 2007 41
Figure 39: Operational Leasing Fleet in Russia by Industry Sector, 2007 41
Figure 40: Growth of Company Car Parc in Russia Relative to Growth in Employment and GDP 2005-2007 42
Figure 41: Employment in Russia by Foreign Based Companies and their Joint Ventures (000s Employees), 2000-2007 43
Figure 42: Number of Employed Individuals in Russia by Industry Sector (000s Employees), 2007 44
Figure 43: Share of Operational Leasing Fleet in Russia Distributed by Fleet Size Segments, 2007 45
Figure 44: Share of Operational Leasing Clients by End-User Fleet Size, 2007 45
Figure 45: Effect on Leasing Contract on Financial Performance of Lessee According to IFRS, Operational vs Finance Lease 47