Overview of Vehicle Leasing (Renting) Market in Portugal Current trends and future prospects

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2 Overview of Vehicle Leasing (Renting) Market in Portugal Current trends and future prospects 2

3 Moderate growth for the overall company car market 450, , , , , , vehicles in fleet in registrations The Corporate car market in Portugal is expected to increase by 3.5% per year over the period , reaching a total figure of 413,389 units in ,000 Growth in the overall market 100,000 is comparable to the mature 50,000 western European markets of - France and Spain Company Car Fleet Company Car Purchases 3

4 Economic uncertainties have forced a general slowdown in the fleet sector The recent events in the change of political set up in the country had a negative impact in the overall Portugal economy with delays in the take off several new projects resulting the economic growth of just 1.6 % in 2005 with moderate forecasts for just 1.8% in 2006 Despite having a comparatively lower unemployment rate compared to the rest of EU, the freezing of public sector recruitments in addition to the layoffs associated with privatizations since the 2003 recession had contributed to a marked increase in the unemployment rate thus affecting the company car markets in Portugal. However thanks to the expansion of large multinational groups that still contributes to the growing company car culture in the country, the fleet market currently represent an approximate 45% share of overall vehicle sales in the country. 4

5 Renting presents promising opportunities The The market market for for operational operational leasing leasing (renting) (renting) is is expected expected to to witness witness progressive progressive growth growth of of over over 8 8 percent percent to to reach reach 128, ,000 vehicles vehicles by by Nearly a third of Portugal s total company car parc will be funded by operational leasing by 2010, courtesy of an average annual growth rate of 8.2% over the next five years % 7.50% 5.00% Despite a stagnant fleet market, renting or operational leasing presents promising opportunities for leasing and fleet management companies that are currently trying to attract multinational companies to outsource the fleet management services through cost effective integrated service offering % Operational leasing fleet Growth 0.00% However, tax on operational leasing monthly payments in Portugal can only be reclaimed for light commercial vehicles, not passenger cars 5

6 Growth in renting occurs at the expense of leasing and outright purchases Penetration of Renting in purchase of company cars Operational leasing Finance Leasing Outright Purchase Renting Outright Purchase Finance Leasing Portugal is one of the fastest growing markets for operational leasing (Renting) in Europe. The following factors contribute to this ever growing sector European IFRS accounting system mandating the compulsory disclosure of cars financed through finance leasing and outright purchases whilst operational leasing provides avenues for non disclosure of assets in balance sheets Provision of integrated service package thus enabling corporate clients to outsource the entire fleet management service. Transparency and flexibility in fleet financing and maintenance Emergence of Pan European fleet outsourcing markets 6

7 With competition amongst leading players getting more intense Classis 15% Others 23% Europcar Fleet Services 14% ALD Automotive 8% Arval PHH 4% GECFFS 11% LeasePlan 22% Masterlease 3% With a operational leasing fleet of circa 19,500 vehicles representing more than a fifth of the total market, LeasePlan is the market leader in the Portuguese market for renting. In the last quarter of 2005, LeasePlan acquired Europcar Fleet Services, the third largest player in the market, to further strengthen its position reaching over a third of the total market, from the current 22% share. Dominant players in the international leasing market are also trying to compete in this market through acquisitions, with the most recent being the acquisition of Multirent, a national renting company, by the Bank Satander Group in Spain 7

8 And European brands marking their presence in the total renting market RENAULT OPEL PEUGEOT FORD VOLKSWAGEN CITRÖEN AUDI FIAT The European brands Renault, Opel and Peugeot account for a 45 percent share of the total renting market in Portugal SEAT MERCEDES TOYOTA BMW / MINI HONDA MITSUBISHI MAZDA 0% 5% 10% 15% 20% 25% 8

9 To sum up, the future of renting in Portugal remains buoyant.. The relatively young and immature renting market of Portugal is expected to experience promising growth, representing one of the fastest growing markets in Europe, comparable to Italy, Spain, Norway, Sweden and Switzerland. However the relative size of the market remains small compared to Spain and Italy and larger than Sweden, Norway and Switzerland making it one of the largest markets amongst the small fleet markets of Austria, Denmark, Finland, Norway, Portugal, Sweden and Switzerland. In this fiercely competitive market environment, leading players like LeasePlan, Classis, Arval and others aim to increase their market presence by providing differentiated service offering aimed at targeting large corporate clients with over 25 vehicles in their vehicle portfolio. The competitive environment is expected to witness further consolidations with fewer players trying to dominate a lions share of the market. 9

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