Leasing industry creates many opportunities in rural areas

Anuradha Kodagoda

The leasing industry has created many opportunities in the rural areas of the country despite the current economic crisis in the world. “The leasing industry concentrates mainly on financial vehicles.

During the past year there was a significant drop in demand for imported vehicles due to the higher tax implementation. The higher tax implementation and the current economic crisis in the world had adversely affected the leasing industry. During 2007, the total value of written leases was Rs. 77 billion and it dropped to Rs.54 billion last year, a 29 percent drop in demand,” said Chairman, Leasing Association of Sri Lanka, Prasanna De Silva.

“Up to 2007, the growth rate in the demand was 15 - 20 percent and that trend changed from last year in an adverse manner. This is mainly due to the higher interest rates and rentals which customers cannot afford,” he said.

“Even though, the current economic situation is affecting the industry adversely, many opportunities have been created within the industry.

Since there is a higher tax implementation on imported and reconditioned vehicles, there is an increase in demand for second-hand vehicles in the country.

“Hence, as the leasing Association of the country, we have educated all leasing companies to grab the market potential in second-hand vehicles to sustain in this crisis situation.”

“From the total portfolio of the industry only 10 - 12 percent have been leased for private cars and the rest is for income generating commercial vehicles such as trucks, three wheelers, tractors and other commercial vehicles for self-employed individuals.”

“Even though, many leasing institutes have not been recognised, there are many untapped markets in the rural areas in the country. There is a higher demand especially for agricultural machinery, three wheelers, motor-cycles, tractors and solar panels in these areas.

Therefore, it is worthwhile to identify these new market segments and there are many leasing companies who have already expanded their services to meet the rural community’s transportation needs,” he said.

“With the dawn of peace, many development projects have been already implemented in the Northern and the Eastern provinces. It has also created many market opportunities for leasing organisations to expand their business,” “Unlike earlier, the industry is quite competitive today and we have to find innovative ways to reach customers. Therefore, being customer-oriented is essential to sustain in the business.

There is no uniform strategy to be employed in the leasing industry. However, the leasing industry is more focused on recovering the advances. It is essential to keep a close rapport with clients and take timely action,” said Silva.