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Tuesday, July 23, 2024

Car leasing comes of age in the Emirates

by Fergi Varghese

Automotive leasing in the Emirates is establishing its credibility rapidly. The concept of leasing is now with the leasing business in the Emirates fast taking root, the concept of car leasing is finding itself with an increasing number of converts.

Originally a spin-off from the car rental business, leasing business, leasing now focuses on corporate customers rather than individual leases. “For companies there are quite definite benefits in leasing as opposed to buying the car themselves,” said Aswini Borkotoky, general manager of Diamond Lease, Al Habtoor’s leasing arm. “In addition to improving a company’s cash flow by saving the cost of purchasing a vehicle, it puts in place better cost controls, and takes away the hassle of having to manage transportation. This will help the company concentrate on its core business instead of trying to keeps its cars on the road.”

According to Aswini, the major advantage for clients is in keeping a steady control on the cash, since leased vehicles have a fixed cost. “If the company buys a vehicle, everything from insurance, service, maintenance and the cost of providing replacement vehicles and staff are variable costs that cannot be budgeted. Leasing in contrast, means a fixed monthly pay-out, thereby offering strict control of expenses,” he explains.

Diamond Lease is among those companies set up to facilitate vertical integration of all areas in the automotive industry by some of the major companies with motor franchises in the UAE. Diamond Lease, as Aswini points out, is now one of Al Habtoor Motor’s largest clients, for sales, service and parts.

“Quality and service are the most important criteria for our customers,” he says. “After all, we are part of a well known business group and have their strength to back us up. We also have the technical and management expertise to run a business, which fulfills the service, and quality criteria sought by our corporate customers. At the end of the day, all the customer wants is to be able to get into the car and drive away without any hassle.”

For the many who have had to endure endless lines waiting to have their registrations renewed, the idea of letting someone else take care of the hassles is an intriguing one.

“That’s why our business is growing so fast,” explains Aswini. “With the promotion of Dubai as an international trading, shopping, and tourism destination, the number of long-staying guests is growing, which means increased business for companies like ourselves.”

Leasing also offers tax benefits in other countries, since it is an expense, which is tax deductible. “As the market matures, more companies will turn to leasing,” says Aswini. “It is not just a question of economic sense, it is also an incredible convenience considering the transient nature of the expatriate lifestyle."

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