Sotiris Kanaris examines the rapidly-growing Romanian motor finance market to see which products and sectors are dominating that economy


Vehicle leasing new business in Romania has increased by 76% over the past five years, reaching €596.1m (£440.6m) in the second half of 2015. Over the same period, the vehicle leasing sector increased its share in the total leasing market from 62% to 77.5%.

According to Adriana Ahciarliu, secretary general at financial companies association ALB Romania, after the economic crisis hit the market in 2008 lessors have focused on financing those assets which offer the lowest risk due to their residual values, boosting volumes in the transportation sector.

In the past three years, the heavy commercial vehicles sector has grown significantly, increasing its share of the vehicle leasing market from 26% to 41%, while passenger cars’ share has dropped from 61% to 47%.

Gabriel Mihai, head of corporate at UniCredit Leasing Romania says: "The transportation sector has been a growth driver for leasing in Romania in the past few years. The increase in trade between Romania and other EU countries – mainly Germany and Italy – together with the low labour cost for Romanian drivers have attracted numerous investments in this sector from local and international companies. Also, the financial discipline of the companies in the sector has improved recently, encouraging the leasing companies to finance significant volumes of trucks and trailers."

General director at BRD Sogelease Jan Kotik says that Romania currently has a comparative advantage on the cost of leasing a truck against other EU countries, but characterises it as "temporary".

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Despite the decrease in market share, the passenger car segment remains strong, mainly due to government incentives. The Romanian government has launched a programme called ‘My First Car’ which partially covers the cost of financing for those individuals who buy their first car and aged 35 or younger.

Another reason behind the strong demand for passenger cars has been the low rates charged by lessors. The market is dominated by international lessors; the majority are bank subsidiaries, which compete aggressively
for business.

At the end of 2014, the top five companies in the vehicle leasing market accounted for 50.82% of leasing volumes.

"When I joined the company in December 2013, the percentage of passenger car customers was 6.5%. At the end of last year it stood at 4.5%," says Kotik.

In the business area, the leasing market for light commercial vehicles in Romania remains small, accounting for only 10% of the market.

Used car leasing market

Another interesting characteristic of the market is the strong used car leasing market, as nearly one in five (18%) of vehicles leased in the first half of 2015 were in the second life.

Ahciarliu says this segment of the market grew after the financial downturn, as leasing companies adapted to the reality of the economy and the needs of the market.

The majority of vehicle leases are carried out through financial leasing, but operating leasing is becoming more popular.

Ahciarliu says: "Operational leasing has a short history in Romania, as it only became a standardised product on the market five or six years ago. Maybe initially the market was unprepared when it came to understanding the incentives that operational leasing was offering."

The rise in the popularity of operational leasing has boosted the fleet leasing market, which has been growing substantially above the GDP growth rate.

In the first half of 2015 the market grew by 16% compared to the same period last year. From 2011 onwards – apart from 2013 – the fleet leasing market in Romania has been recording double-digit growth.

Bogdan Apahidean, chief executive officer at LeasePlan Romania explains: "The reason for this trend is that more companies and entrepreneurs are discovering the advantages of operational leasing: no down payment and a predictable and transparent cost structure.

"The first clients were international companies operating in Romania, but we now see SMEs interested in this product as well as companies with fleets of LCVs.

"Fuelled by economic stability, the market transactions have constantly increased and so did the need for business-to-business
services, such as operating lease."

Young market

Apahidean says that players entering the market can benefit from the fact that the market is still young, although he highlighted that competition has grown and is exerting pressure on prices.

"As new foreign investors are arriving in Romania and the demand for operational leasing is on the rise, we expect we will have a market of around 100,000 units at the end of this decade," says Apahidean.