Leasing and fleet management companies should take advantage of the rapid development of Russia’s corporate car market, where outsourcing trends are in very early stages of development, according to market research company Datamonitor.
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Datamonitor estimates that just over 250,000 cars were sold to business users in 2006, around 15% of total new car sales in Russia and 14% ahead of 2005.
The corporate purchase sector in Russia is benefiting from a number of factors including:
- The growing economy;
- More cars purchased by international companies, who tend to replace pools more often;
- A growing number of cars are purchased on leasing, introducing regular replacement intervals for corporate cars;
- Public sector institutions are tending to renew their car parc more often;
- The emergence of more small- and medium-sized enterprises.
Foreign brands are benefiting from growth in corporate sales. Compared with the total market, AvtoVAZ/Lada has a lower market share in the corporate car segment. In 2005, the brand accounted for 46% of all new cars sold in Russia, but its market share in the corporate car market alone was estimated at 32%.
This difference largely reflects the significant proportion of corporate car sales in Russia absorbed by international companies. Lada, and – other Russian makes – are still favoured by public sector organisations, but even there, locally assembled foreign brands, such as Ford and Hyundai, are increasing their share.
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By GlobalDataAmong the non-Russian brands, the best-selling corporate car is Ford. In 2005, corporate car sales accounted for around a quarter of its total new car sales in Russia.
Datamonitor also says that there is wide scope for growth not only for corporate car sales, but also for related services, such as corporate car financing and management. Outsourcing of corporate car management is already a well-established practice in other European markets, and international companies are now looking eastwards for expansion.
With its large and growing corporate car parc, estimated at 2.3 million cars, Russia is regarded as a market of high potential.
International fleet management companies are hoping that the ownership-conscious market will start to recognise the benefits of operating a fleet on rental contracts, looked after by specialised firms. As happened in Central and Eastern Europe five years ago, in Russia this trend is also being kick-started by foreign companies. A few of the largest international leasing companies have already entered the market; ALD Automotive and Arval have both made an entry since 2005, and in the second half of 2006 Volvo became the first foreign carmaker in Russia to branch out into full-service leasing for corporate clients.
For more details of Datamonitor’s report on the Russian Automotive Market please click here
