New lease of life
Simon Oliphant must sometimes wonder whether his business card is big enough given the number of posts he occupies after a series of management changes at Hitachi.
Now UK chairman of Hitachi Capital Vehicle Solutions having previously served as chief executive officer, he remains a director of parent company Hitachi Capital UK as well as being placed in charge of a new strategy office created by Hitachi Capital Corporation Japan. The aim of this new operation is to help foster global growth, with a particular focus on Europe.
Room for growth
Having led last year’s acquisition of Poland’s Corpo Flota he is well‐suited to this role; and there is still plenty of scope for operational leasing to grow in Eastern Europe in particular, he contends.
“In Poland its penetration is less than 30% compared with the 50% to 60% seen in more mature markets,” he observes. The Czech Republic and Hungary offer potential too, he believes.
Move further east however and things become rather more problematic, he admits.
“Leasing businesses are suffering in Russia what with the devaluation of the rouble and the impact of sanctions and the economy there is struggling,” he says. Ukraine’s difficulties need no further explanation.
Turkey however offers bright prospects, he believes, thanks in part to the high front‐end price of executive cars.
“The special consumption tax that is imposed means that something like a BMW 5 Series can set you back well over €200,000,” he points out.
“However, strong residuals mean that you can typically recoup 70% to 80% of this when it is disposed of second‐hand.”
It is a scenario that is almost tailor‐made for operational leasing. “The position in Singapore is very similar,” he adds.
How about the situation in China? “In the long term the possibilities are massive but at present the penetration of operational leasing is comparatively low,” Oliphant observes.
Sudden tax changes
One difficulty is the risk of sudden and unexpected changes made by the government to the way in which leases are treated for tax purposes. “That happened quite recently and leasing companies were not consulted in advance,” he says.
Other countries in South East Asia offer potential too, he adds. “At present, however, they are for the most part relatively immature so for the moment the packages offered are less‐complex than those offered in Europe,” he comments.
A challenge posed by many of these countries is the absence outside urban areas of the comprehensive supporting infrastructure (franchised dealers, high‐calibre independent workshops, fast‐fits and so on) that operational leasing typically requires. That need not make life impossible for lessors, says Oliphant, but it does mean they have to adapt to the prevailing local conditions.
Past meets future
“It may mean for example that you have to resort to manual invoicing – raising an invoice and putting it in the post – and to getting any work that needs done authorised by telephone,” Oliphant says. In effect it means turning the clock back to the way Western Europeans did things 20 or 30 years ago; but it is an approach that worked then (albeit slowly) and can work now.
“Remember too that there are many emerging markets that make good use of technology,” he says. “Thailand for example is very advanced in its use of GPS.”
Mobility budgets will however only work satisfactorily in countries with highly‐developed support mechanisms he says; an all‐encompassing rail network for example.
“The use of rail travel, car clubs and so on has a lot of potential,” Oliphant comments. “The key challenge is how you set about joining all these things up.”