T&E Analysis: Leasing Companies Post High Profits – and Slow Down in Electrification

The largest European leasing companies increased their profits by 59 percent between 2018 and 2022, even though their fleet only grew by 5 percent. This is the conclusion of a new report by the research institute Profundo, commissioned by Transport & Environment (T&E), which examined the profit developments of the seven largest European leasing companies: ALD | LeasePlan, Alphabet/BMW Financial Services, Arval, Leasys, Mercedes-Benz Mobility/Athlon, Mobilize Financial Services, and Volkswagen Financial Services. According to Profundo, the companies generated a total of 15.7 billion euros in 2022. This financial strength would allow leasing companies to change their strategy and become pioneers in the transition to electric cars in the EU market. However, T&E investigations have shown that the leasing sector is not taking a leading role in the electrification of the market. Furthermore, none of the examined leasing companies have set an exit date for environmentally harmful combustion engines.

Great Potential for Electrification - but Low Ambitions

The greatest profit growth was recorded by Arval (192 percent) and Leasys (143 percent). The German companies Volkswagen Financial Services (VWFS) and Alphabet/BMW Financial Services increased their profits by 85 percent and 29 percent, respectively. In contrast, although the fleet size of VWFS grew by 28 percent, Alphabet/BMW Financial Services managed to increase profits even with a reduction in fleet size by 9 percent. The study also examines the return on equity of these companies - the measure investors use to determine a company's financial health. A company is considered "healthy" if the return on equity is above 10 percent. The return on equity of leasing companies rose from an already high 21.2 percent in 2018 to 27.2 percent in 2022. For comparison: banks - the owners of leasing companies and a comparable sector - record returns on equity between 7-12 percent.

"Leasing companies are raking in billions in profits but are putting few electric cars on the road. They're missing their chance to be pioneers. With their large fleets, leasing companies could make a decisive contribution to a faster transition to electromobility. But they prefer to focus on quick profits," complains Stef Cornelis, Director of Electric Fleets at T&E.