Beyond traditional leasing: building flexible models for a volatile market

By Ugne Kontare, Chief Business Development Officer, SOFT4Leasing

When disruption becomes the norm

Think about what happened when the US suddenly imposed a 25% tariff on auto imports. Overnight, car prices jumped, supply  chains got scrambled, and all those carefully planned residual value forecasts went out the window. Manufacturers and dealers had to scramble to figure out their next move. This wasn’t just a one-off political decision – it’s become the new reality.

We are not just talking about trade wars here. Multiple forces are hitting the leasing sector all at once. The economy keeps  throwing curveballs with unpredictable inflation, changing interest rates, and recession fears that directly affect how much things  cost and how much customers can spend. Political tensions around the world disrupt trade routes and supply chains.

New regulations, especially around environmental standards and data privacy, create compliance headaches and change how we value assets. Technology keeps advancing at breakneck speed – AI, IoT, blockchain, electric vehicles – making existing equipment outdated faster than ever.

On top of all of this, customer expectations are shifting. Younger  generations don’t want to own things anymore; they want access  to them. They want flexibility, instant service, and digital convenience. All these forces together are not just causing minor  adjustments – they are demanding that leasing companies completely rethink how they design products, manage risks, and run  their operations.

Customers want access, not ownership

The traditional leasing contract – those rigid three-to-five-year agreements with fixed terms and confusing fine print – feels  outdated in today’s world. Modern customers, especially Millennials and Gen Z, care more about getting what they need when they need it than owning depreciating assets. They want mobility solutions, not car payments. They want equipment that works for  their projects, not machinery sitting around collecting dust.

This shift in thinking is real and it’s driving new business models:

Subscription leasing

Just like Netflix or Spotify, customers can swap assets as their needs change. A business might exchange  equipment based on seasonal projects, or someone might switch from an SUV for winter trips to a compact car for city driving.  These packages often include insurance, maintenance, and roadside assistance, giving customers one predictable monthly payment with no surprises.

Usage-based models

Using smart technology and sensors, payments are tied to actual use – miles driven, hours operated, or  features used. This means customers only pay for what they actually consume, which feels fair and transparent. It also gives leasing companies valuable real-time data to prevent breakdowns, manage assets better, and assess risks more accurately.

Customers become hesitant to commit when they’re worried about getting stuck with bad terms.

Short-term agreements

Instead of locking customers into long commitments, these agreements offer shorter terms that match
how people live and work today. This appeals to customers who want to avoid getting stuck in situations that might not work for  them down the road.

Digital-first service

Today’s customers expect everything to be as easy as ordering food on their phone. That means instant  approvals, clear pricing with no hidden fees, and mobile apps where they can manage everything themselves. These digital platforms let customers handle payments, schedule service, and get support whenever they need it.

In a world where nothing feels certain, customers want control and options in their financial commitments. Leasing companies that can deliver this flexibility are seeing stronger customer loyalty and better growth.

Market shocks as stress tests

That 25% auto tariff is a perfect example of how external shocks can devastate an entire industry. Car affordability dropped  overnight, leasing profits got squeezed, and all those residual value calculations that determine profitability became worthless.  Existing contracts locked in pre-tariff pricing saw their profits disappear, while new deals faced higher costs and customers  couldn’t afford them.

But tariffs are just one type of disruption. Consider these other game-changers:

Supply chain problems

Covid  showed us how fragile global supply chains really are. Remember the semiconductor chip shortage  that shut down car production for years? Port delays and manufacturing disruptions directly impact when leasing companies can  get assets and how much they cost.

Energy price swings

When gas prices spike, demand shifts to electric vehicles or smaller, more efficient equipment. Meanwhile,
gas-guzzling assets in leasing portfolios lose value fast.

Technology is moving fast

Beyond electric vehicles, we are seeing rapid advances in self-driving cars, connected devices, AI, and
industrial automation. Equipment that’s cutting-edge today might be obsolete in just a few years, throwing traditional depreciation schedules completely off track.

These shocks expose the weaknesses of rigid, long-term leasing models. Customers become hesitant to commit when they’re  worried about getting stuck with bad terms. Leasing companies without flexibility struggle to predict asset values accurately,  leading to big losses. Flexibility has moved from being a nice-to-have competitive advantage to an essential survival skill.

Leaders who stick with outdated models, hampered by inflexible systems and old assumptions, risk being left behind.

The strategic value of flexibility

In this chaotic environment, flexibility isn’t just about offering a cool new product – it’s about building a business that can adapt,  survive, and even profit from change. It means completely overhauling operations and strategy to absorb shocks and stay balanced.

Here are the key building blocks for real flexibility:

Multiple model support

The ability to run traditional leases, subscriptions, and usage-based contracts all on the same platform. This requires sophisticated backend systems that can handle different billing methods, contract terms, asset tracking, and  accounting rules without creating a mess.

Dynamic configuration

The power to quickly adjust pricing, contract terms, product bundles, and risk settings as conditions  change. This is powered by advanced analytics and automated systems that can take in market data – like used car prices, interest rates, energy costs – and immediately suggest or make changes to stay profitable and competitive.

Customer empowerment

Easy-to-use digital platforms and mobile apps that give customers real control over their contracts. This  includes self-service options for payments, usage tracking, contract changes, and asset swaps. This transparency builds trust and  reduces administrative work for everyone.

Integrated analytics

Powerful, real-time data analysis that brings together market conditions, survive geopolitical indicators, asset usage patterns, and customer behaviour. This data provides insights to manage risks proactively, prevent fraud, adjust residual  value forecasts, optimise remarketing, and maximise profits. Flexibility needs to be built into the company’s technology, processes, and culture – not just bolted on as an afterthought.

Preparing for the next
wave of change

The future will definitely bring more disruption: new tariffs, stricter climate regulations, faster adoption of electric vehicles, AI in  asset management, and constantly evolving customer behaviour. The question isn’t whether these shocks will happen, but whether leasing companies will be ready for them.

Leaders who stick with outdated models, hampered by inflexible systems and old assumptions, risk being left behind. They’ll lose  market share to more agile competitors and see their profits shrink. On the other hand, leaders who embrace flexibility – not just in technology, but in operations and company  culture – will build resilient organisations.

They’ll position themselves not just to survive, but to thrive and capture new opportunities in an uncertain world.

Recent tariff shocks and other global disruptions have clearly shown the weaknesses of
traditional, rigid business models.

The new leasing imperative

The leasing industry is at a turning point. Recent tariff shocks and other global disruptions have clearly shown the weaknesses of  traditional, rigid business models. At the same time, customers are demanding more agile, personalised, and transparent leasing solutions that match their values around access and flexibility.

To succeed in this new era, leasing companies must move beyond traditional approaches. They need to design systems and  strategies that don’t just acknowledge volatility but actually embrace it, turning uncertainty into opportunities for innovation and  competitive advantage.

Flexibility is no longer optional – it’s become the fundamental competitive edge that companies need to succeed in today’s volatile  market.

Author: Ugne Kontare
Chief Business Development Officer
SOFT4Leasing
V. Putvinskio g. 53
LT-44248 Kaunas
Lithuania
Email: info@soft4leasing.com
Website: www.soft4leasing.com