“One journey, different paths" - Buying, Leasing or Renting

"Should I invest my savings in a car? Will I still have the same need a year from now?" In order to help SME and Privates, LeasePlan's consultancy team has developed the study "One journey, different paths" - Buying, leasing or renting?, an exercise which analyzed the costs of use and described each management/acquisition model - buying, leasing or renting -, demystifying not only the elements to be taken into account for an effective financial comparison between the various models, but above all showing the advantages and disadvantages of each management model.

The uncertainty with which we are currently confronted often leads us to question whether what we usually do already is undoubtedly the best option to be taken. Not only companies, but also individuals, are increasingly facing needs that were not considered a priority a while ago, such as mobility, flexibility, and accessibility. These new challenges lead us to look for other options, to question the current options, and to analyze the various hypotheses that the market offers us.

In comparing the various management models, the study "One journey, different paths" - Buying, leasing or renting? presents five main conclusions:

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  Renting is the management model where the total costs of use are lower, both for private customers and companies, and which presents greater flexibility since the customer acquires the renting service and can dispose of it at any time. Since this model is a service and not a product, the customer is not the owner of the vehicle, sometimes causing discomfort to some consumers.

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  The buying model is the model that gives the customer the most freedom, since the customer manages the entire life cycle of the vehicle himself - from the moment the vehicle is purchased to the moment the used vehicle is sold. It is the model with the highest total costs of use, and no economies of scale are taken advantage of, since each consumer is independent to make his or her own decisions and choose his or her own suppliers.

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  The leasing model guarantees greater freedom of choice at the end of the contract, since the client can choose whether or not to purchase the vehicle. This model has advantages in the negotiation of the vehicle over the purchase, but loses its competitiveness in the management of the useful life, which is also done individually by each client.

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  Fiscally, the leasing and buying models become less advantageous, since taxation is levied on the total acquisition value of the vehicle, both in terms of corporate income tax and personal income tax

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  The vehicle is increasingly seen as an element of affirmation of one's identity (or legacy) in the case of individuals, and as an instrument of attraction and retention of talent for companies. In the case of companies, the possibility of transferring the management of their fleets to specialized entities represents an opportunity to focus on their core business and, above all, to save on vehicle usage costs. The renting model provides not only the vehicle itself but also the entire management of its useful life, thus freeing up internal resources for other tasks more valuable to the organizations.

In the current context of uncertainty, renting is undoubtedly the model where contractual flexibility emerges as one of the most important criteria to be taken into account. The added value of being able, at any time, to adjust the vehicle to new needs or even terminate the contract early allows the customer not to mortgage his decisions and to enjoy a freedom that is difficult to find in other acquisition models.

But it is also obvious that each consumer values different issues, and therefore there is no single truth. Each customer will certainly have his or her own preference in his or her vehicle management model, based on his or her prioritization of needs.