Aleksandr Koshcheyev, the CEO of the Ukrainian leasing fund and the vice-chairman of the director’s board of the Ukrainian Association of lessors told about such tendency, having explained to LDaily by the aid to what the company has achieved such results and what it is necessary to work on. It turned out that positive dynamics in the market of leasing services began from last year.One of the main segments is an agricultural industry which began actively to buy the equipment in leasing.
Also, it was very interesting to hear Aleksandr’s opinion on the companies characteristic which has “survived” during the protracted crisis and a general unrest in the country.
LDaily: Could you tell how today does the leasing market of Ukraine feel?
A. Koshcheyev: Growth of the leasing market in the 1st half-year of this year constituted 21% in comparison with the same period of the last year. The total cost of the financed objects of leasing has constituted 2,5 billion UAH against 2 billion UAH. These data include indicators on the transport market.
However, there is one more important sector for financing which recently has shown a big growth. It is agricultural machinery and the equipment.
LDaily: What are on this background happen to automobile leasing? How does the situation influence on unstable dollar exchange rate?
A. Koshcheyev: The market of leasing sales was considerably hyped up: for the last 8 months 2,7 thousand cars have leasedю It is by 61% higher than a similar indicator of 2015 (1 676 units). Also, for the last 4 months, the level of leasing sales penetration into general sales has broken all records: the average value for this period has constituted 8,15% (against 6,72% in 2015).
Such positive dynamics, on the one hand, is explained by a growth of general car sales (for 44%: 41 347 units, January-August, 2016 against 28 745 units for January-August, 2015). On the other hand, it is activation of players of the leasing market, including regarding co-branded programs with motor shows/auto brands with the purpose to offer to clients the most attractive terms on financing.
Jumps of US dollar exchange rate strongly affects the automobile market as all prices of import cars are directly tied to currency. Respectively, when the rate rises, the cost of machines is also raised. Over the past few years, an average cost of a car grew from 250 to 600 thousand hryvnias.
If to consider the market by segments, in such situation the low-cost suffered most of all. A raising of the prices for this type of clients was essential and unreasonable. On the other hand, all other segments have shown growth in comparison with last year. Even more, it belongs to a volume segment in which the widest line of brands is provided: Fiat, Peugeot, Citroën, Nissan, Renault, Skoda, VW, Ford, Toyota, etc.
LDaily: On the example of your company, what type of leasing is the most demanded today and why?
A. Koshcheyev: It is difficult to allocate a separate type of leasing as popular. The service is filled proceeding from needs of the specific client. If to speak about our company, approximately 80% of the ULF Finance agreements are agreements of net financial leasing without filling by services. At the same time, there is a part of clients who are a number of reasons not ready to register independently in automobile tech inspection, wheel change, to control process of repairs, to settle insurance events with an insurance company. For this clients, we can suggest filling the agreement of financial leasing with services which are necessary for them.
An operational leasing, which in addition to above listed, gives to the client the chance not to redeem a car, and, for example, to change it for a newer model on the leasing expiration that can be an alternative to this offer. Such type of leasing is clear to the international companies or the large companies which purchase a large number of machines. If to estimate the Ukrainian market new cars leasing, in general, operational leasing occupies about 2/3 markets.
Separately I want to note the pre-owned cars financing after leasing which has been increased its popularity among clients for the last years .
LDaily: How is the situation with the legislation ?
A. Koshcheyev: In general, the legislation on leasing market regulation in Ukraine is one of the best among the Post-Soviet countries. However, there are always moments which need to be enhanced.
The biggest problem looks the question of the value added tax in a situation of early leasing subject return. Since January 1, 2015, the new version of the law on the electronic administration of the VAT has come into force. In a case of withdrawal of a leasing subject, the debtor often doesn’t wish to register a tax delivery note and the leasing company can’t affect it. According to the new edition of the law in the case of further sale of a leasing subject, the debtor shall pay repeatedly this tax in the budget. It is categorically wrong from the point of view of economic justice.
One more problem which it would be desirable to solve is payment of the VAT upon purchase of a car in the used market. A source of cars with a run in most cases are private persons who aren’t VAT payers. During the car buying process and leasing it at them, the leasing company shall pay the VAT for all cost. Not so long time ago the matter was resolved for car dealers: in the case of used resale of the VAT cars. It is considered from a difference in the price, but not of a car all cost . For the time being, we try to affect that also the leasing company was such buyer-seller.
LDaily: Does the Ukrainian leasing fund take part in forming or enhancement of the legislation?
A. Koshcheyev: As the vice- of the Ukrainian lessors association chairman of the director’s board, I take the active part in the solution of those problems about which I spoke above.
For example, we recently have begun to work more actively with Committee on financial policy, banking activity and with National committee of finance service over the new edition of the law on financial leasing. The existing leasing law morally has become outdated and doesn’t correspond to the new realities. The project provides an elimination of gaps and not coordinations between various regulations which regulate leasing activities, enters a number of the new concepts promoting the formation of civilised rules of the game.
In practices to the law, there is also an additional focus on lessees protection interests and individuals consumers, proceeding from a logic that there is a party which is apriori weaker and less grounded in the legal plan.
LDaily: Is it the truth that leasing services are in the lesser demand? Did you observe such tendencies in the Ukrainian leasing fund?
A. Koshcheyev: According to ULF Finance sales, we see the returning tendency: after a collapse of sales in 2014 every year sales to our company has increased pace both in quantitative expression and in percentage (market share). At the moment, every 4th car in leasing is taken through ULF Finance, and we don’t stop on this indicator, developing loyal offers on financing for clients if to look at ULF share in general auto sales. In 2014 it has constituted about 1%. This indicator has increased to 1,7% for 8 months of 2016 .
Our company is an exclusive leasing partner of the BMW Financial Services program in Ukraine. The special offers also affect the Toyota cars, the automobile and commercial vehicles Renault.
LDaily: As the businessman, could you characterise the companies which have managed “to survive” during the prolonged crisis in the country on the example of those who provide leasing services?
A. Koshcheyev: First of all, it is the companies with a “net history” which have no serious problems with the back. For example, difficult clients have been financed for large sums which for some reason ceased to pay.
Secondly, it is the companies which final owners didn’t disappoint in the country and didn’t dispose to leave.
The third point is the companies with the working business model in a case of which there is a clear understanding as who can sell and also are estimated and accepted risks. At some of our colleagues on the leasing market risk, the policy is very conservative.They don’t work with small and medium business and hold a large segment. But the same is also their problem because they compete among themselves, fight for transactions not always on conditions, profitable to themselves.
Our company isn’t afraid to work with small and medium business, private persons.It is visible from the stated above figures. In this segment meanwhile the competition less tough.
We have created risk policy for many years but at the same time, in the case of need, we have adjusted it. For example, during events of 2013, we have reviewed ours risk policy. We excluded a number of activity types from the list of those with whom we could cooperate, and also reviewed the minimum advance payments.
ULF Finance (The Ukrainian leasing fund) has been working at the financial market of Ukraine since 2011. According to the Ukrainian consolidation of lessors, the company has won the first place on new registration of transport (in 9 months of the 2016 and annual figures of 2014,2015 ),1st place on the amount of new business (according to indications of 2015). The cost of the financed leasing objects ,following the results of last year, has constituted 979,2 million hryvnias.
