Trends in the French Leasing Sector

Companies operating vehicle fleets in France have suffered a +5.4% increase in rentals over the past year. New car prices are up by +4.8% in the last 12 months, and the servicing, maintenance and repair (SMR) budgets built into contract hire rentals have also gone up by +3.5%; both of which impact the cost of leasing.

Yet the French contract hire sector appears positive about the economy and future used vehicle market, with forecast residual values improving by +2.5% since June 2014, having risen steadily over the last 2 years.

The figures come from the latest Experteye European Leasing index survey, which tracks forecasted residual values (RV), servicing, maintenance and repair (SMR) costs and rental rates in six European countries using data supplied by major leasing companies.

More recently, the picture in France looks quite settled. Over the last 6 months, rentals have crept up by only +1.1% and have started falling in the latest quarter, with a -1.7% reduction in leasing prices since March this year.

French optimism in future residual values has also subsided, with forecast RV moving by only +1.7% in the last 6 months and +0.5% for the quarter. SMR budgets appear to be fluctuating, and since the back end of 2014 they have fallen by -5.3%, but have only shifted by -0.7% in the last 3 months.

Yet Experteye’s managing director, Rick Yarrow, explains that for companies operating fleets in France, fortunes currently depend on the types of vehicles on lease.

“If you are a French business operating a fleet of light commercial vehicles (LCVs), you will have enjoyed a far better time of late than those with car fleets,” explained Rick.

“Compared to the +5.4% rise in car leasing, LCV rentals have dropped by -2.8% in the last year, and are down by -9.6% over the last 2 years; a significant saving for commercial vehicle operators.

“French car fleet operators are also not suffering the worst price rises across the nations we survey,” continued Rick. “In Germany, contract hire rates have shot up by +8.1% in the last year and in Spain they have risen by +5.8%.

“In the UK, however, prices have risen by slightly less than in France (+3.5%), and in Italy and Portugal rental rates have come down by -0.3% and -3.6% respectively.”

Interestingly, French forecast residual values as a percentage of new car prices have still not recovered since the recession. Part of the Experteye survey creates an index which tracks movements in RVs each year, and after 6 years France’s RVs remain below the ratios reported back in 2009.

“On the 1st January 2009 we gave all forecast residual values a nominal index of 100 and have been tracking their movements as a proportion of new car prices ever since,” said Rick.

“Six years on and France’s small, medium, large and luxury cars all sit below the index they started with, only executive models producing stronger forecast RVs now than they did back then.”