The acceleration of auto leasing in a post-pandemic marketplace

The acceleration of auto leasing in a post-pandemic marketplace

By Terje Kjøs, CEO, Banqsoft

The year 2020 will undoubtedly be the year remembered by the novel Coronavirus pandemic, which swept our world from the bottom-up and shook our global economies to the core. While many companies are still phasing through the aftermath, it is likely that we will still have a high level of uncertainty for a foreseeable time.

In this article, we are looking into how this has affected the auto financing industry where the future might look brighter than expected for those who can offer what the customers prefer.

During the second quarter of 2020, the auto industry experienced a dramatic drop in sales of new cars and temporary shutdown of car factories. Although many countries are gradually opening up again, it will take time to get back to normal, and the new normal is most likely not as it was before.

Yet, despite market turmoil – customers still need transportation. Will there be the need for more cars due to instructions to avoid public transport? Will the technology shift towards electric and hybrid cars continue in the same speed as before? Will road trips by car be more popular? Or will we just experience a major decline also in the need of transportation and car sales in our new normal?

An interesting observation is that two of the largest finance companies in Norway saw a sudden sharp incline in the amount of loan applications for used cars, despite the fact that we were in the middle of the Corona lock-down.

Independent of the different scenarios, there are now multiple factors pointing in the direction that the auto finance companies will play an even more significant role in the future of mobility.

Stability in an unstable market. In times of uncertainty, consumers tend to shift towards buying options that will ensure stability, affordability and market value predictability. Most consumers want more predictability – especially in times of uncertainty. Consumers have the power to drive our financial and auto markets in relation to how much they are willing to pay and invest to cover their mobility needs, and we expect the consumers to have less risk appetite on e.g. the residual value going forward.

 Predictability and convenience. This speaks in favour of leasing, which is safer for the consumers as the cost is predictable, combined with the fact that consumers do not have to tie up large amounts of capital and can avoid the risk of the residual value of the car when the leasing period ends.

Convenience is also another important aspect. Consumers prefer hassle-free and paper-free processes when buying or leasing cars. The financing part is often seen as a pain, and those who can offer a convenient process will be the winners.

Furthermore, added services is key to ensure convenience for the user of a car, and we also see that rental companies with flexible, all-inclusive offerings are growing – most likely because of the great flexibility and convenience for the consumer.

For many, convenience is synonymous with online sales and mobility. However, what may be even more significant is to incorporate the same train-of-thought in an omnichannel strategy. A leading example of this perspective is Volkswagen Semler Finans Denmark, which emphasises keeping a customer-centric approach as their first priority.

“Lessors and lenders need to meet their customers where they are – not only on different platforms and on the internet, but also in today’s dealerships,” says Rene Sterregaard, CEO and Managing Director at Volkswagen Semler Finans in Denmark. “This inspires the omnichannel thought of where and how we integrate different methods of shopping available to consumers.”

Changes in digital transformations. Consumers today expect high-level digital experiences more than ever before, resulting in the extent that some businesses have created fully automated systems in place to take the financing process from start to finish.

“As a company, we are putting in a high investment to give our customers a completely digital experience when they buy or lease a car through our dealerships. To reach that target, we are currently developing integrated and digital solutions together in a close partnership with all our vendors and stakeholders, so we can meet the digital requirements of our customers,” says Rene Sterregaard.

Another interesting example of this digital transformation is Carvana, an up-and-coming online used car dealer based in the US who brand themselves as a ‘car vending machine’. The new online used-car dealer offers a fully automated application process for buying and financing used cars online, while also offering car delivery straight to your door.

Consumers want convenience – and this fully digital example goes to show how quickly the industry is transforming the way people buy cars.

The future of leasing. It is a question as to how the industry will develop based on consumer priorities: Will this incline in leasing lead to changing mobility trends? Could it lead to car-sharing and environmentally friendly transportation?

 According to a forecast report for the Global “Car Leasing Market”, the global car leasing market size is estimated to grow at CAGR of 15% with revenue of US$18.38m units during the forecast period 2020–24. The “YOY (year-over-year) growth rate for 2020 is estimated at 12.4% by the end of 2024.”1

Reflecting on the growth of leasing in the past couple years, we can forecast that leasing will have a growing, promising future in the auto market. The financial outlook can also limit alternative ways of financing cars like paying them from the mortgage.

With an increase in leasing, rental and new convenient mobility services based on the leasing concept, asset finance companies will play a significant role in the future. They will be the ones owning the cars and have a stronger relation to the consumer. When owning large fleets of cars, they also can get access to data giving good insight to develop new services.

Automated end-to-end solutions. While we cannot exactly confirm how the market will develop in the future, what we do know is that technology will be the key to being competitive. Convenience and simplification for the consumer means more complex and automated solutions for the financing company. This will require more auto finance companies to implement software that offers simplified processes for online sales and to make financing easy and predictable for consumers with fully digital and automated processes – and this is where we can help.

Banqsoft offers future-proof systems in order to help auto finance companies stay ahead of the game. From end-to-end standardisation and highly-automated customisable platforms and processes, Banqsoft has the insight and technology to keep your finance company up to speed throughout future market changes and innovations.



1 “2020 Global Automotive Consumer Study.” Deloitte, 2020, Accessed 20 May 2020, and “Global Car Leasing Market 2020-2024.” Industry Research, 21 Feb. 2020, Accessed 30 September 2020.



Terje Kjøs



Østensjøveien 32

0667 Oslo


Tel: +47 22 31 44 00