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Is CV industry ready?

Is CV industry ready?

Passenger Vehicle leasing is a widely known concept which has steadily grown over the years in Indian market. At the same time, Commercial Vehicle leasing has faced its own set of headwinds. To name a few, domination of micro fleet operators (2 – 5 trucks) resulting in relatively low or nil importance to legal and tax benefits coupled with marketing and recovery bottlenecks. In the developed countries, CV leasing has grown from 4 per cent market share in the 70s, to over 30 per cent today. In the Indian context, future of CV leasing may be at tipping point today.

Leasing companies can very well use technology for fleet management and keeping an indirect eye on the key performance indicators. This integrated with payment patterns will offer the ability to regularly assess risks associated with recovery of lease amount.

Leasing companies will be required to play the role of consolidator with support of micro fleet operators. Micro operators will indirectly need to work as managers to run on-ground transportation operations to ensure timely lease payment and earn their living. Further, with an incentive and penalty “carrot and stick” clause, behaviour can be monitored, giving them a chance to buy the CV at the residual value.

Leasing company can also guide micro operators on Futuristic Movement which includes freight rates, volumes, turnaround times and cargo availability. There can be other benefits as well in terms of maintenance costs, insurance, safety, training, fuel management and accident management.

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