Managing the mobility of a business can become a real stumbling block in the life of an upcoming entrepreneur. Having access to a car can often be essential when it comes to upscaling one’s business endeavors, but let’s face it – a SME’s budget can rarely afford a purchase of this caliber right away. While opting for a lease has become an unofficial stepping stone for small entreprises, the traditional form of car leasing is no longer ideal for the dynamically changing startup world. This is why Volkswagen Financial Services has decided to upgrade their operating leasing offer to better suit the needs of modern SMEs.
So, why isn’t the traditional system of operating leases the way to go for most startups? The trouble doesn’t necessarily lie in the steep entry fees, or even the prospect of paying off large monthly installments – it’s all about what comes after the three or four year contract comes to a close. By the end of its run, most of the typical lease contracts allow the client to buy out the vehicle for 1% of its value. This, paradoxically, may no longer be desirable for a modern SME.
According to studies carried out by Volkswagen Financial Services, becoming a car owner is no longer a priority for most of us – access to a reliable vehicle is all that matters. And with that, there’s the desire to upgrade what we’re driving on a seemingly regular basis. In the more advanced European markets, few people look at cars as things to be owned. Most customers lease or buy cars on market residual value loans – they pay for using the cars. Mobility, or freedom of using the car is of utmost importance to them. Not ownership.
By eliminating the end-game vehicle ownership component, the company can decrease the exploitation costs of the leased cars. As a result, clients are able to pay off only the decrease in a car’s initial value, which significantly lowers the cost of monthly lease payments.
After a lease contract comes to an end, the client is expected to return the vehicle to a chosen car dealer. The prospect of simply driving it to the salon at the end of the contract also takes care of the hassle of trying to sell the used vehicle once the client decides to upgrade their fleet. Instead, they’re able to renew their contract and pick out a brand new model to lease for the next few years.
Does Volkswagen Financial Services’ offer sound a logical solution to your startup’s mobility problem? For more information about their lease contracts, feel free to check out their website.
Volkswagen Financial Services was Impact rEvolution’18 Strategic Partner.