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Manu P. Toms

Mumbai, Aug 15 With network expansion in mind, the premium car makers are facilitating cost-effective operational leasing route for dealers to deck up their showrooms with the latest models.

The idea is to arrange vehicles for dealers from a leasing company.

The car models are leased out by the dealers primarily for demo purposes.

“Normally dealers procure cars from manufacturers at a subsidised price. Now we have given them an option to take vehicles on lease.

“This scheme results in operational economy for every one,” says Mr Ashish Kaul, Head, Corporate Sales, Honda Siel Cars India.

Through operational leasing, automobile manufacturers can save a substantial part since they no longer need to offer subsidies to the dealers.

Honda recently got into a leasing arrangement with BNP-Paribas subsidiary Arval, an operational leasing and fleet management company with international presence.

For dealers, they need not purchase cars yet they can exhibit them on their showrooms and demonstrate their drivability.

On the other hand, the third party, the operational leasing company also makes gains.

“In normal purchasing route, the dealers face a risk of depreciating resale value. There is up to 15 per cent depreciation in a year’s time. That is being borne by the leasing company in this case. The cost of selling has come down,” said Mr Kaul.

The leasing route is opted not only for dealers but also for vendors.

“We have offered the leasing option to our vendors and many have opted for this,” said Mr Ankush Arora, Vice-President (Marketing), GM India.

GM has tied up with a number of operational leasing companies, including Arval and Orix Auto Infrastructure Services.

“Instead of EMIs, we are paying a monthly rental to the leasing company. We just started migrating to the leasing route of arranging demo cars for our showrooms. We have already taken five cars on lease,” said a Chennai-based dealer.

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