Toyota’s growing share of Europe’s car market is mainly driven by private sales, as the car maker has yet to win stronger presence in corporate fleets, according to London-based independent market analysis firm Datamonitor, which said that last year just over 3% of all passenger cars sold to corporate buyers in western Europe were Toyotas.
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By comparison, the carmaker’s share of the retail market is 5.5%.
“With two thirds of its sales absorbed by private buyers, Toyota has a very profitable sales ratio, but if it wants to increase total volumes, the company needs to pursue the corporate route a bit harder,” said Datamonitor analyst Jugoslav Stojanov.
“The most efficient channel to do this in western Europe are leasing companies that specialise in financing and management of corporate fleets, where Toyota still has a comparatively small share,” added Stojanov.
Datamonitor has researched the volume of fleet sales sold through the rental, fleet and retail sectors across the leading seven European markets and highlighted manufacturer fleet penetration for all major manufacturers in Europe in a special report.
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By GlobalDataAccording to the research, Europe’s best-selling corporate car brand last year was General Motors’ Opel, with business accounting for 60% of its total sales in Europe’s seven largest car markets. Second was Volkswagen and third was closely contested by Renault and Ford.
Nearly half the new passenger cars sold in the seven largest markets on the continent in 2005 were bought by legal entities, ranging from car rental companies and large corporations through to governments and small companies.
The penetration of corporate sales tends to increase when the going gets tough for the retail market. Last year, private buyers largely held off purchases of new cars due to low confidence in the economic recovery. “The retail market doesn’t worry too much about high mileage and losses in residual value,” said Stojanov. “Business users, on the other hand, need to replace cars more often because of high usage, depreciation and expiry of leasing contracts. In addition to that, more and more small- and medium-sized firms seem to be funding their purchases on long-term rental which secures more dynamic replacement rates and, in turn, higher annual sales.”
The improvement in the non-private car sales is a result of, among other things, the recovery of the car rental market in Europe.
Companies such as Hertz, Avis and Europcar take around a 10th of all new cars sold in Europe’s top seven markets: Belgium, France, Germany, Italy, the Netherlands, Spain and the UK.
Following the hardship inflicted after the terrorist attacks in the US, the tourism-driven leisure segment of car rental has gradually regained strength, but according to Stojanov, there is another reason why more cars end up in the pools of car rental firms: “Many of those cars are hired by companies for business use in the form of medium-term rental, ranging from a month to six months. In a bid to keep more cash available for investment, companies exercise prudence in vehicle procurement particularly when additional cars are needed for temporary projects or temporary employees. In such cases, they avoid binding commitments of the likes of leasing or buying more cars and simply rent them.”
The study also showed the different preferences that retail and corporate buyers have in terms of size of cars they buy, showing that business buyers generally buy larger cars than private buyers. More than 40% of the cars sold for private use are small cars, ranging from small city cars to superminis. Business buyers, on the other hand, are mostly after cars in the compact class, such as VW Golf, Renault Megane or Opel Astra. Compact cars also account for the largest share of the European car rental pool, which in 2005 absorbed 12% of all compact cars sold in Europe’s seven largest car markets.
