What is a full-service operating lease and why is business interested in it? Answers from Ayvens

If you run a business or are responsible for a corporate budget, you know well that a company fleet is a big expense that needs to be seriously considered.

However, operating leasing changes the approach – from “car ownership” to “mobility management”.

For a fixed subscription fee each month, companies not only receive a car of their choice, but also free up funds, as they account for the service as a monthly, rather than capital, expense and thus do not block company funds.

When the contract term expires, the vehicle can be returned, and the company can easily choose a newer, more efficient, or more environmentally friendly one – according to its needs and strategy.

John Saffrett is Deputy CEO of the world’s largest operating leasing provider – Ayvens , part of the Société Générale group.

The company manages more than 3.4 million vehicles in 41 countries. It was born from the merger of two global leaders – ALD Automotive and LeasePlan in 2023 and has a concrete plan to meet the changes in the field of mobility related to electrification, technology and sustainability.

We spoke to John Saffrett at Ayvens ‘ office in Bulgaria to understand why, after 28 years with the company, he remains enthusiastic about the future of mobility.

For whom are the solutions you offer suitable – are they only for large corporate players, or for smaller companies as well?

What we offer is suitable for everyone. Depending on the maturity of the market, we work with large international clients, large local corporate fleets, small and medium-sized companies.

In some countries we also work with private clients. If I look at the Bulgarian market, I see serious potential in large corporations. But over 50 per cent of our fleet is under 50 vehicles – that is, we are talking about small and medium-sized enterprises, where we see great potential for switching to operational leasing.

Therefore, we need to help the market understand what operating leasing is and what its advantages are.

What are the advantages of operating leasing in the long term compared with purchasing a car?

The market is still oriented towards financial leasing, but I think we can contribute with the expertise we have. The full value of owning a car is far from being limited to the interest rate – how much does it cost to maintain the car, how much does it cost to change the tyres.

For example, thanks to the scale of the company, we buy tyres at lower prices than what a person would pay if they went to a service center themselves.

We service cars cheaper than if you did it yourself.

We can also offer insurance that is more affordable.

Financial leasing is designed to allow the customer to acquire the vehicle at the end of the contract – after four to five years. However, our observations show that when an internal combustion engine vehicle – petrol or diesel – reaches these four to five years, problems start to appear, parts wear out, and costs increase.

For small and medium-sized enterprises, the car is of key importance. And that is why an increasing part of this segment in other European countries is switching to operational leasing. Often it is light commercial vehicles that are essential for the delivery of goods, materials or services.

And then the customer says to himself: “I’m paying 350 euro a month for this car anyway, it’s better to continue with a fixed cost of 350 euro a month and get a new car than to face problems if I buy it and then it goes into service – then I won’t be able to serve my customers, deliver my goods or visit my sites.”

We see this development curve in every market – from purchase to financing, then to finance lease type financing and then to operating leasing. I do not expect Bulgaria to be any different, but I believe that this transition will accelerate with the entry of even more investments that we can expect with the eurozone. This will stimulate the adoption of operating leasing and will change people’s thinking.

Operational leasing is actually one of the first forms of subscription service – you have a car for four to five to six years, you pay a fixed monthly amount, you use it, everything is included except fuel. Then you return it and get a new one.

You have no commitments to buying, selling, or maintaining – everything is included.

And with the arrival of new generations who prefer this particular usage model, this product will become increasingly attractive.

So can we say that Bulgaria is at the beginning of this path?

Yes, I think you are in the early stages of this journey. We have been in Bulgaria for a little over 10 years, and our experience in other markets shows that development is gradual. Sometimes government tax policies or incentives can accelerate this transition.

It usually starts with the corporate sector. Large companies and small and medium-sized enterprises are the first, and then private buyers also show interest.

And this trend will continue, because many corporations will say, “I’m an expert in supermarket management, or in soft drink distribution, or in the pharmaceutical industry. But I’m not an expert in fleet management – so I’ll turn to a professional to do it for me.”

And this is completely logical – in life we ​​always look for the best experts to help us with what we are not strong at.

And I believe that this is exactly what will accelerate the transition in Bulgaria, both to operational leasing and to a more environmentally friendly fleet.

Can large companies like yours contribute to supporting the green transition – and how?

Of course. We are already working with a number of local and national authorities in other countries, where we provide advice on how to manage the transition to sustainable mobility. What tax incentives work – both for the purchase of new electric and plug-in hybrid cars, and for the used car market.

If we look at the car fleet in Bulgaria – a significant part of it is very old. And that means it’s quite polluting.

Therefore, these cars need to be replaced and people need to switch to newer, cleaner vehicles. Leasing can often be an effective tool in this transition.

Consumers may be hesitant to buy an electric car because they don’t know what the experience is like. They may also not want to lease a new one because it seems expensive.

But if they can lease a used electric car that is four to five to six years old, it will facilitate the entry of such vehicles into the general public. This is a way to democratize access to electric cars – because, as we said, they are still expensive.

Leasing products actually make electric vehicles more accessible to people, and that’s why we can work with governments and local authorities on such programs, as well as with banks and local providers who want to offer mobility solutions to their customers.

What is your view on the infrastructure in Bulgaria?

Charging infrastructure — yes, that’s always the first big hurdle to transitioning to electric vehicles. And it’s important both at home and in public places.

Many people overestimate how many kilometres they drive per day. And there are already electric cars with a range of 300 to 400km on a single charge.

Our analysis of customer journeys shows that if a person has a charger at home and charges at night, 80 per cent of people will never need to charge in public because their daily mileage is lower. And if they reach a destination, there is often a charging station there too.

We need to think about the remaining 20 per cent , but they are the “noisy” part – those who say “there is no place to charge”, “I can’t travel”, “there are no stations on the highway”, and so on.

But that will change. Eldrive, for example, is one of the main companies investing in charging infrastructure in Bulgaria.

As demand grows, more companies will join the development of this infrastructure. We will also see an increasing evolution towards fast charging — sessions where the battery is charged to 80 per cent in 15 minutes instead of three hours.

Then refuelling will start to look like a regular gas stop: you stop, refuel, get a coffee, something to eat, go to the bathroom — and get back in the car. With fast charging, we’re already entering this scenario where you can make a short stop and continue.

Unlike diesel and petrol cars, electric cars can be charged in many more places at home, in shops, and on motorways.

Bulgaria is certainly already reaching this level.

Ayvens is the world’s leading company in the field of mobility. What are your predictions for the development of operational leasing and the challenges in this sector?

Our vision is first and foremost about supporting our clients. We start from their needs – what they need now and what they will need in five to 10 years, and how we can help them meet the challenges of the future.

The first of these is the transition to electric mobility.

It is not easy because it represents a completely different model of car use compared to what we have known for the past 50–60 years with petrol and diesel cars.

There are challenges related to charging infrastructure . Many European countries are changing their tax systems and introducing incentives to encourage electrification. There is also a price effect – these cars, especially the first generation, are usually more expensive than the market can bear or people can afford.

That’s why we need to help clients through this entire process. Because we work in so many markets, we have more information than anyone else and can provide the necessary expertise.

Companies are under pressure to act more responsibly and reduce their environmental footprint on the planet, in order to preserve it for future generations.

This means we need to help corporations not only with their company fleet, but also with the overall mobility of their employees — whether it’s commuting to work, choosing transportation to customers, or ensuring sustainable mobility for all their employees.

The entire mobility sector faces a huge transformation challenge – it is one of the last industries yet to digitise.

There are many physical touchpoints in it – car pickup and drop-off, service, maintenance, repairs, etc. All of them have huge potential for digitalisation.

Standards are extremely high today. If people use platforms like Uber or Bolt and get a flawless digital experience, or Revolut for banking, they expect the same quality of digital services in every other area of ​​their lives.

And our ambition is to digitalise processes so that it is easier for drivers and fleet managers to manage their fleet.

It is expected that by 2030, more than 60 per cent of new cars in Europe will be electric. How does Bulgaria fit into this transition?

We see that a second wave of countries is now beginning to feel the challenge of electrification.

In Bulgaria, you face all the challenges that we have already observed in other European markets: the high price of electric cars, the insufficient charging infrastructure, the uncertainty of the average buyer.

The transition usually starts in the corporate sector. Companies have requirements and commitments to be more sustainable.

And what is exciting for Bulgaria is that with your entry into the euro zone in January next year, we expect an increase in investments from large companies.

I believe they will come with sustainability requirements and this will accelerate the penetration of electric vehicles and drive sustainable transformation.

In terms of digitalisation, Bulgaria is one of the countries that is developing faster in this direction, perhaps because you don’t carry so much inherited “old” – the feeling here is of innovation and a new economy.

What is your advice to businesses?

Companies need to think about the “total cost of ownership” when considering how to finance their fleet.

They should not automatically reject the option of leasing used cars – especially when we are talking about electric cars. Because electric cars have a longer life and simpler mechanics.

This article first was published, in Bulgarian, on the Boulevard Bulgaria website.