The wheels of change: Charting the evolution of B2B automotive leasing

Automotive leasing has come a long way. Today, it’s a thoroughly modern means of maximising the benefits of business mobility – but the concept of equipment lease dates back to the ancient Sumerians, the civilisation also credited with inventing the wheel itself.

Fast-forward to the early twentieth century. After rental offerings emerged in the United States (US) in the 1910s, long-term lease propositions for business fleets followed in the 1940s. The access-instead-of-ownership model then thrived in the booming post-World War II economy, allowing businesses to free up capital and lighten their balance sheets.

The idea took longer to catch on in Europe, where Ayvens’ legacy company LeasePlan pioneered the open calculation system in the 1970s. LeasePlan was also the first to introduce global agreements in the 1990s – the same dynamic decade in which Ayvens’ CEO, Tim Albertsen, entered the industry.

“I’ve seen plenty of change over the past 35 years,” Tim says. “For one thing, the US and European leasing markets have developed rather differently. In Europe, you need an operational lease to take an asset off the balance sheet; in the US, a financial lease is enough. What’s more, many US leasing providers were burnt by the residual values crisis of the late 1990s and stopped taking on the residual risk of full-service operating agreements.”

Tim also highlights cultural differences between the American and European leasing industries. “Benefit cars are much less common in the US, with business-use vehicles making up a far greater proportion of company fleets. Meanwhile, leasing is more common for consumer products, which is why the private vehicle lease segment has historically been more popular there. That’s now changing in Europe, due to the overall mindset shift from ownership to usership and the decline of cars’ appeal as status symbols.”

In the 1990s, large corporates turned to fleet leasing solutions primarily to free up capital, especially when looking to expand into new markets in Eastern Europe. But, as Tim explains, there was another important factor: “Customers wanted to outsource fleet administration, saving time, resources and costs. Full-service leasing remains extremely popular in this segment, making up around 65% of Ayvens’ agreements with corporates today.”

And no wonder. Operational leasing is a one-stop shop for vehicles, fuel, insurance, maintenance, telematics … in short, everything required to keep a business fleet moving. Of course, it’s not just large multinationals that benefit from fleet management solutions like Ayvens’.

“After the 2008 financial crisis, small and medium enterprises (SMEs) couldn’t secure bank financing for their vehicles, so they came to the leasing industry,” remembers Tim. “They soon found that operational leasing was an efficient, effective way to fund and run their fleets.”

In 2012, ALD Automotive, Ayvens’ other legacy company, pioneered white-label partnership solutions with manufacturers, helping to further penetrate the SME sector. “Now, advanced vehicle technology makes full-service propositions even more relevant,” Tim continues. “Electrification and connectivity are great for corporate customers, but only if they don’t distract from their strategic priorities. They don’t want the headache of managing a modern fleet alongside running their business – so that’s where we come in! SMEs now make up 65% of our retail fleet.”

That brings us to the biggest developments of recent years: several seismic shifts that are still shaking up the leasing landscape. Even with all his experience, Tim describes it as a particularly exciting – albeit challenging – time for the industry.

Take digitalisation and artificial intelligence (AI), for instance: “Digital is simply how you do business now,” Tim says, “but, in my view, our industry’s behind on this front. There’s a lot that needs to improve, especially when offering digital services at a global level. The same applies to data quality. The consistency’s not there yet, but for the leasing providers that get it right, AI brings huge opportunities to improve both the customer experience and business efficiency.”

Meanwhile, the EV transition continues, under mounting pressure from European regulators. “It’s a complex shift for corporates,” Tim notes, “and it requires specialist support from leasing providers. At Ayvens, we’ve developed sophisticated fleet electrification solutions – including consultancy, products and services – to make sure we give the best possible advice and support to our customers as they navigate the powertrain transformation.”

Of course, the corporate leasing industry is about more than just hardware and software: it all starts with people. “Attitudes to mobility are changing. Multimodal travel is on the rise, especially in urban environments, and B2B customers are increasingly interested in mobility-as-a-service (MaaS) alternatives to large traditional fleets. So-called mobility budgets, for example, offer an integrated ecosystem of mobility options, enabling greater flexibility and a smoother user experience – and can even benefit employees who don’t qualify for a company car.”

What’s more, these business trends are slowly but surely impacting the consumer sector. In particular, leasing can provide reassurance when individuals decide to make the switch to an EV, taking the financial risk and burden off their shoulders. Today, 35% of Ayvens’ retail segment is made up of private individuals, and the growing shift from ownership to usership is expected to accelerate in the coming years.

Leasing may have started out as a financing model, but today it’s about more seamless, more sustainable, more accessible ways of moving and living. As he prepares to hand over the steering wheel, Tim is confident that Ayvens is ready not just to adapt to the future of mobility, but to continue to help shape it.

“We have a strong legacy of pioneering change in the industry, and no intention of stopping now. I’m extremely proud of what we’ve achieved so far – and I look forward to seeing where the journey takes Ayvens and the industry next!”