Automotive Leasing in India Likely to Reach 8% of Total Sales Within 5-8 Years

ORIX Corporation India Ltd, a mobility solution and financial service provider, anticipates that India’s automobile leasing market will experience 7 to 8 percent of the overall vehicle sales in the next 5 to 7 years. The company provides services such as self-drive rentals, leasing, and financial services. The Managing Director and CEO of ORIX Corporation, Vivek Wadhera states that the overall vehicles in the automobile leasing market will rise more than the current 2 percent in these 5 to 7 years. It is due to more young generation coming into the workforce. It indicates that car leasing is gaining popularity in India because of its convenience and cost-effectiveness facility. The leasing provides benefits such as lower monthly payments, no down payments, and gives the opportunity to change cars in a few years only. This is the reason that makes automotive leasing attractive for the younger generation coming into the workforce.

The company expects profits to be 30-35 percent higher in this current fiscal year as compared to the previous year and also considering good traction in its business operations. The profit of last year was around USD 12 million. While, the company is expecting to make a profit of 16 to 18 million in this current fiscal year.

Vivek Wadhera also states that compared to the western automobile and automobile leasing market, the Indian leasing market accounts for only 1 to 2 percent of the total number of automobile sales. According to the industry estimate, the passenger vehicle sales in India in the year 2024 were around 43 lakh units. While in western markets such as the US market and also the Japanese and Chinese market account for 30-40 percent.

ORIX corporation and its performance
ORIX India is a subsidiary of ORIX Corporation Japan. The parent company is a global leader with a network of over 38 countries and has 9 trillion yen worth of assets. In India, ORIX has two subsidiaries known as ORIX Auto Infrastructure Services Limited (OAIS) and ORIX Leasing and Financial Services India Limited (OLFS). ORIX corporation has collaboration with original equipment manufacturers (OEMs) such as Maruti Suzuki, Kia, Volkswagen, FCA, Honda, Skoda, Nissan, Tata Motors and Mahindra and Mahindra for subscriptions. The company has car leasing facilities in Mumbai, Bangalore, New Delhi, Hyderabad, Kolkata, Chennai, Pune, Jamshedpur, Ahmedabad, Gurgaon and Noida. He also states that many customers do not purchase vehicles, but Indians prefer to buy vehicles. However, it only accounts for 1 to 2 percent of total automobile sales via leasing or subscriptions. One of the growth drivers for the industry is to consider the type of younger generation entering the workforce. According to him, the younger generation entering the workforce now focuses more on rentals than ownership. They focus more on experience and travel. This type of mindset is observed in the real estate segment as well. In the eight-months of this fiscal year, the company was able to outperform its 12 months’ performance in the previous fiscal year. This performance was observed when RBI had not cut rates till now. It is a good sign indicating that the company will face good profits at the completion of this fiscal year.

The image added is for representation purposes only