The global vehicle leasing industry is currently facing pressure from legislators both directly and indirectly. Primarily, policymakers across the globe are drafting laws with an objective to curb vehicular pollution and decongest traffic. They impose laws in form of bans to vehicles powered by diesel engines, increase to annual vehicle ownership taxes, emission based taxes, and changes in tax calculation methodologies. These laws impact the vehicle leasing industry directly, creating challenges to both sales and operations. Mobility Budget, Cash for Car, Diesel Bans and Worldwide Harmonised Light Vehicle Test Procedure (WLTP) are notable policies that impact leasing industry directly.
Second, there are certain legislations which are planned/ implemented in order to achieve specific goals which are not directly targeted at the automotive industry or fleet leasing services. However, those laws drive negative sentiment toward the industry. For example, the International Accounting Standards Board (IASB) - which sets accounting standards for companies, changed the way of reporting operational leases in the financial statement. The law is applicable to multinational companies reporting in International Financial Reporting Standards (IFRS). The objective of IASB is to improve transparency and consistency in financial reporting by invoking IFRS 16, the new standard. The new standard demands all operational leases, not just cars, to be reported as assets and liabilities in the balance sheet starting 2019. Traditionally, companies have been reporting their operational leasing expenses as operating expenses in the income statement (not balance sheet), which helps them save tax. With the new standard demanding operational leasing to be reported similar to that of financial leasing as assets and liabilities in the balance sheet, companies are starting to doubt whether the benefits of operational exist anymore.
Additionally, a few countries are involved in the process of restructuring their tax system, which again created waves of negative sentiment on the vehicle leasing community. For instance, India replaced its old tax system with Goods and Services Tax (GST) system starting July 2017. This forced several lessees to file pre-closure on their leasing contracts, fearing exorbitant increases in monthly leasing fee.
These new changes in policies create both challenges and opportunities in the market. Through this study, we aim to research all major legislation enacted/ proposed between 2017 and 2019 that are expected to shape the market. Overall, the study provides a 360 degree understanding of the new legislation and impact analysis on various industry participants including independent leasing companies, OEM captives, and lessors (multinational companies & SMEs). The impact is analyzed mainly in terms of trends in sales volume, the emergence of any new mobility services. The study also provides recommendations in terms of impact mitigating strategies and challenges associated with compliance with the new standards.
1. Executive Summary
- Key Findings
- Key Implication on the Leasing Industry
2. Research Scope
- Research Scope
- Research Aims and Objectives
- Key Questions this Study will Answer
- Definitions - Types of Legislations
- Definitions - Vehicle Leasing
4. International Financial Reporting Standards IFRS 16
- New Financial Accounting Standard - Background
- IFRS 16 - What Changes?
- IFRS 16 - Financial Impact
- IFRS 16 - Financial Impact Mitigation Strategy
- IFRS 16 - Financial Statement Accounting Strategy
- IFRS 16 - Administrative Impact
- IFRS 16 - Administrative Impact Mitigation Strategy
- IFRS 16 - Industry Talk
- IFRS 16 - Outlook
5. Emission and Decongestion Laws
- Emission and Decongestion Laws -Background
- Emission and Decongestion Laws -Overview
6. Phasing out of Diesel Engines
- Phasing out of Diesel Engines - Overview
- Phasing out of Diesel Engines - Impact Analysis
- Phasing out of Diesel Engines - Analyst Outlook
7. Worldwide Harmonized Light Vehicle Test Procedure (WLTP)
- WLTP - Background
- WLTP - What Changes?
- WLTP - Implementation
- WLTP - Impact Analysis
8. Mobility Budget
- Mobility Budget - Background
- Mobility Budget - What Changes?
- Mobility Budget - Analyst Outlook
9. Fiscal Policies
- Fiscal Policies - Background
10. Fiscal Policies -Tax Changes in Europe/Americas
- Fiscal Policies - Changes in Europe/Americas
- Fiscal Policies - Analyst Outlook
11. GST in India
- GST in India - Overview
- GST in India - What Changed?
- GST in India - Impact Analysis
- GST in India - Analyst Outlook
12. Growth Opportunities and Call to Action
- Growth Opportunities and Call to Action
- Strategic Imperatives for Success and Growth
13. Key Conclusions
- Key Conclusions and Future Outlook
- Legal Disclaimer
- List of Exhibits