ECONOMY

CAR LEASING AND FLEET MANAGEMENT

Company cars as a work tool and a tax-saving fringe benefit are becoming increasingly more popular in Greece. High-level executives with brand-name cars enhance the prestige of their corporations and employees use them for their work and as a family amenity. One of the most important factors supporting this trend is the availability of leasing (long-term renting) and fleet management offered by a growing number of players in the field. Which may explain the abundance of executive-type cars on the Greek roads these days. As defined by the experts, automobile operating leasing is based entirely on the concept that a company or an individual pays for the amount by which a vehicle’s value depreciates during the time it is being driven, plus the cost of the various services included in the monthly lease. Depreciation is the difference between a vehicle’s original value and its value at lease-end and is the primary factor that determines the cost of leasing. With company-owned cars accounting for the second-highest cost after the payroll, the size of the operating leasing market is growing, next year estimated to reach 300 million euros. The fact that the same law covers both car rentals and car leasing makes for a number of players lacking the required experience and expertise. Fleet management, which offers significant benefits to corporations, is expected to grow substantially in coming years. Leasing allows companies not to lay out large sums for the purchase of vehicles and their maintenance or to have to show them as assets in their balance sheets. Under the various leasing programs, the cost of a car fleet is written off as an expense, thus reducing the tax coefficient. They also do away with the problem of having cars on their hands at the end of their life cycle. In accordance with their house rules, companies allow employees to choose a car of a certain monetary value and engine power best suited to their work and status. The leasing company takes over from there and the only cost, apart from the monthly payment, is the petrol. Vehicles with the lowest depreciation make the best lease deals. For the monthly fee, the leasing companies cover insurance, service, body shop repairs, change of tires, road tax, emergency roadside assistance 24-7, and temporary or permanent replacement in case of accident or theft. Says Nestor Louizides, business manager of Reuters Hellas: «It is logical and definitely more flexible. It reduces the administrative burden and provides the option of different cars to suit the needs of the individual employee.» As laid out by LeasePlan, a global leader in leasing which entered the Greek market in 2003, the objective is to match an optimal fleet management solution to a company’s specific requirements. The company focuses on clients with medium-sized and large fleets who gain from the expertise gained from managing over 1.2 million vehicles per year. «Fleet management,» argues Philippos Zagorianakos, managing director of LeasePlan Hellas, «is a complex process that can be made simple by an expert. It’s a service, so when selecting your supplier you should look for much more than getting the cheapest price. Quality, reliability and transparency should be your top criteria.» Using its experience in 26 countries worldwide, LeasePlan Hellas has introduced innovative programs in Greece, such as its Open Calculation, which keeps a tight rein on car expenses and helps clients reduce costs, and its online reporting tool which gives fleet managers better control over the day-to-day running of their fleet. Dirent Operating Leasing is a Greek company which came on the market in 1998 and now manages a fleet of 5,500 cars, many to top-echelon companies. According to marketing and public relations executive Anna Louradou, it is the only such company to lease vans, mostly used by companies for their distribution networks. In a very competitive market, companies vying for a piece of the action offer extras beyond the basic package of leasing and fleet management. Dirent, for example, offers comprehensive third-party insurance of 1.5 million euros plus half a million euros in material damages for each separate car, as opposed to the usual «package insurance» for all cars in a company. It also has what it calls a «fill and go» petrol policy, with company employees using special credit cards at EKO petrol stations, making it easier for companies to keep a tight control on petrol expenses. The average company car fleet leased is about 25 cars but this is not indicative of the number of cars in a corporation. Market sources say many companies do not employ one leasing or fleet management source. This is because some leasing companies can obtain better deals for a certain type of car. Also, clients such as media or advertising agencies attract more advertising by spreading their business with leasing companies.