Legislation Impact on Global Light Vehicle Fleet Leasing Industry, 2018

Legislation Impact on Global Light Vehicle Fleet Leasing Industry, 2018

Leasing Companies Shall Endure With Strict Emission Laws to New Accounting Standards Through Innovative Products and Strategic Planning

RELEASE DATE
20-Nov-2018
REGION
Global
Research Code: MDE6-01-00-00-00
SKU: AU01738-GL-MR_22568

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Description

The global vehicle leasing industry is currently facing pressure from legislators both directly and indirectly. Primarily, policy makers across the globe are drafting laws with an objective to curb vehicular pollution and decongest traffic. They impose laws in form of bans to vehicles powered by diesel engines, increase to annual vehicle ownership taxes, emission based taxes, and changes in tax calculation methodologies. These laws impact the vehicle leasing industry directly, creating challenges to both sales and operations. Mobility Budget, Cash for Car, Diesel Bans and Worldwide Harmonised Light Vehicle Test Procedure (WLTP) are notable policies that impact leasing industry directly.

Second, there are certain legislations which are planned/ implemented in order to achieve specific goals which are not directly targeted at the automotive industry or fleet leasing services. However, those laws drive negative sentiment toward the industry. For example, the International Accounting Standards Board (IASB) – which sets accounting standards for companies, changed the way of reporting operational leases in the financial statement. The law is applicable to multinational companies reporting in International Financial Reporting Standards (IFRS). The objective of IASB is to improve transparency and consistency in financial reporting by invoking IFRS 16, the new standard. The new standard demands all operational leases, not just cars, to be reported as assets and liabilities in the balance sheet starting 2019. Traditionally, companies have been reporting their operational leasing expenses as operating expenses in the income statement (not balance sheet), which helps them save tax. With the new standard demanding operational leasing to be reported similar to that of financial leasing as assets and liabilities in the balance sheet, companies are starting to doubt whether benefits of operational exist anymore.

Additionally, a few countries are involved in the process of restructuring their tax system, which again created waves of negative sentiment on the vehicle leasing community. For instance, India replaced its old tax system with Goods and Services Tax (GST) system starting July 2017. This forced several lessees to file pre-closure on their leasing contracts, fearing exorbitant increases in monthly leasing fee.

These new changes in policies create both challenges and opportunities in the market. Through this study, we aim to research all major legislations enacted/ proposed between 2017 and 2019 that are expected to shape the market. Overall, the study provides a 360 degree understanding of the new legislations and impact analysis on various industry participants including independent leasing companies, OEM captives, and lessors (multinational companies & SMEs). The impact is analyzed mainly in terms of trends in sales volume, emergence of any new mobility services. The study also provides recommendations in terms of impact mitigating strategies and challenges associated with compliance with the new standards.

Table of Contents

Key Findings

Recommendations

Key Implication on the Leasing Industry

Research Scope

Research Aims and Objectives

Definitions—Types of Legislations

Glossary

Definitions—Vehicle Leasing

New Financial Accounting Standard—Background

IFRS 16—What Changes?

IFRS 16—Financial Impact

IFRS 16—Financial Impact Mitigation Strategy

IFRS 16—Financial Statement Accounting Strategy

IFRS 16—Administrative Impact

IFRS 16—Administrative Impact Mitigation Strategy

IFRS 16—Industry Talk

IFRS 16—Outlook

Emission and Decongestion Laws—Background

Emission and Decongestion Laws—Overview

Phasing out of Diesel Engines—Overview

Phasing out of Diesel Engines—Impact Analysis

Phasing out of Diesel Engines—Analyst Outlook

WLTP—Background

WLTP—What Changes?

WLTP—Implementation

WLTP—Impact Analysis

Mobility Budget—Background

Mobility Budget—What Changes?

Mobility Budget—Analyst Outlook

Fiscal Policies—Background

Fiscal Policies—Changes in Europe/Americas

Fiscal Policies—Analyst Outlook

GST in India—Overview

GST in India—What Changed?

GST in India—Impact Analysis

GST in India—Analyst Outlook

Growth Opportunities and Call to Action

Strategic Imperatives for Success and Growth

Key Conclusions and Future Outlook

Legal Disclaimer

List of Exhibits

List of Figures
  • 1. Legislation Impact on Light Vehicle Fleet Leasing Industry: Market Impact Analysis, Global, Up to 2022
  • 2. NEDC vs. NEDC Correlated Result, Global, 2018
  • 3. Legislation Impact on Light Vehicle Fleet Leasing Industry: Market Impact Analysis, Global, 2018
List of Charts
  • 1. Legislation Impact on Light Vehicle Fleet Leasing Industry: Key Findings, Global, 2018
  • 2. Legislation Impact on Light Vehicle Fleet Leasing Industry: Recommendations, Global, 2018
  • 3. Legislation Impact on Light Vehicle Fleet Leasing Industry: Types of Legislations, Global, 2018
  • 4. IFRS 16: Financial Impact to Lessee, Global, 2018
  • 5. Sample Case Study: Financial Statement Accounting Strategy—Current vs. IFRS 16, Global, 2018
  • 6. IFRS 16: Administrative Effort—Impact Based on Type of Asset, Global, 2018
  • 7. Emission Targets: Timeline, Global, Up to 2022
  • 8. Shift in Preference: Impact on Company Car Fleet Lessees, Global, 2018–2022
  • 9. EV/Hybrid Vehicle Leasing: Impact on Leasing Companies, Global, 2018
  • 10. Company Car Market: Fleet Segmentation, Europe*, 2013–2022F
  • 11. Changes in New Emission Test Cycle: NEDC vs. WLTP, Global, 2018
  • 12. WLTP: Important Timelines for WLTP Adoption, Global, 2017–2022
  • 13. WLTP: Financial Impact, Global, 2018–2020
  • 14. Legislation Impact on Light Vehicle Fleet Leasing Industry: Notable Changes in Car Policies, Europe and Americas, 2018
Related Research
The global vehicle leasing industry is currently facing pressure from legislators both directly and indirectly. Primarily, policy makers across the globe are drafting laws with an objective to curb vehicular pollution and decongest traffic. They impose laws in form of bans to vehicles powered by diesel engines, increase to annual vehicle ownership taxes, emission based taxes, and changes in tax calculation methodologies. These laws impact the vehicle leasing industry directly, creating challenges to both sales and operations. Mobility Budget, Cash for Car, Diesel Bans and Worldwide Harmonised Light Vehicle Test Procedure (WLTP) are notable policies that impact leasing industry directly. Second, there are certain legislations which are planned/ implemented in order to achieve specific goals which are not directly targeted at the automotive industry or fleet leasing services. However, those laws drive negative sentiment toward the industry. For example, the International Accounting Standards Board (IASB) – which sets accounting standards for companies, changed the way of reporting operational leases in the financial statement. The law is applicable to multinational companies reporting in International Financial Reporting Standards (IFRS). The objective of IASB is to improve transparency and consistency in financial reporting by invoking IFRS 16, the new standard. The new standard demands all operational leases, not just cars, to be reported as assets and liabilities in the balance sheet starting 2019. Traditionally, companies have been reporting their operational leasing expenses as operating expenses in the income statement (not balance sheet), which helps them save tax. With the new standard demanding operational leasing to be reported similar to that of financial leasing as assets and liabilities in the balance sheet, companies are starting to doubt whether benefits of operational exist anymore. Additionally, a few countries are involved in the process of restructuring their tax system, which again created waves of negative sentiment on the vehicle leasing community. For instance, India replaced its old tax system with Goods and Services Tax (GST) system starting July 2017. This forced several lessees to file pre-closure on their leasing contracts, fearing exorbitant increases in monthly leasing fee. These new changes in policies create both challenges and opportunities in the market. Through this study, we aim to research all major legislations enacted/ proposed between 2017 and 2019 that are expected to shape the market. Overall, the study provides a 360 degree understanding of the new legislations and impact analysis on various industry participants including independent leasing companies, OEM captives, and lessors (multinational companies & SMEs). The impact is analyzed mainly in terms of trends in sales volume, emergence of any new mobility services. The study also provides recommendations in terms of impact mitigating strategies and challenges associated with compliance with the new standards.
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Table of Contents | Executive Summary~ || Key Findings~ || Recommendations~ || Key Implication on the Leasing Industry~ | Research Scope~ || Research Scope~ || Research Aims and Objectives~ | Definitions~ || Definitions—Types of Legislations~ || Glossary~ || Definitions—Vehicle Leasing~ | International Financial Reporting Standards IFRS 16~ || New Financial Accounting Standard—Background~ || IFRS 16—What Changes?~ || IFRS 16—Financial Impact~ || IFRS 16—Financial Impact Mitigation Strategy~ || IFRS 16—Financial Statement Accounting Strategy~ || IFRS 16—Administrative Impact~ || IFRS 16—Administrative Impact Mitigation Strategy~ || IFRS 16—Industry Talk~ || IFRS 16—Outlook~ | Emission and Decongestion Laws~ || Emission and Decongestion Laws—Background~ || Emission and Decongestion Laws—Overview~ | Phasing out of Diesel Engines~ || Phasing out of Diesel Engines—Overview~ || Phasing out of Diesel Engines—Impact Analysis~ || Phasing out of Diesel Engines—Analyst Outlook~ | Worldwide Harmonized Light Vehicle Test Procedure (WLTP)~ || WLTP—Background~ || WLTP—What Changes?~ || WLTP—Implementation~ || WLTP—Impact Analysis~ | Mobility Budget~ || Mobility Budget—Background~ || Mobility Budget—What Changes?~ || Mobility Budget—Analyst Outlook~ | Fiscal Policies~ || Fiscal Policies—Background~ | Fiscal Policies—Tax Changes in Europe/Americas~ || Fiscal Policies—Changes in Europe/Americas~ || Fiscal Policies—Analyst Outlook~ | GST in India~ || GST in India—Overview~ || GST in India—What Changed?~ || GST in India—Impact Analysis~ || GST in India—Analyst Outlook~ | Growth Opportunities and Call to Action~ || Growth Opportunities and Call to Action~ || Strategic Imperatives for Success and Growth~ | Key Conclusions~ || Key Conclusions and Future Outlook~ || Legal Disclaimer ~ | Appendix~ || List of Exhibits~ | The Frost & Sullivan Story~
List of Charts and Figures 1. Legislation Impact on Light Vehicle Fleet Leasing Industry: Market Impact Analysis, Global, Up to 2022~ 2. NEDC vs. NEDC Correlated Result, Global, 2018~ 3. Legislation Impact on Light Vehicle Fleet Leasing Industry: Market Impact Analysis, Global, 2018~| 1. Legislation Impact on Light Vehicle Fleet Leasing Industry: Key Findings, Global, 2018~ 2. Legislation Impact on Light Vehicle Fleet Leasing Industry: Recommendations, Global, 2018~ 3. Legislation Impact on Light Vehicle Fleet Leasing Industry: Types of Legislations, Global, 2018~ 4. IFRS 16: Financial Impact to Lessee, Global, 2018~ 5. Sample Case Study: Financial Statement Accounting Strategy—Current vs. IFRS 16, Global, 2018~ 6. IFRS 16: Administrative Effort—Impact Based on Type of Asset, Global, 2018~ 7. Emission Targets: Timeline, Global, Up to 2022~ 8. Shift in Preference: Impact on Company Car Fleet Lessees, Global, 2018–2022~ 9. EV/Hybrid Vehicle Leasing: Impact on Leasing Companies, Global, 2018~ 10. Company Car Market: Fleet Segmentation, Europe*, 2013–2022F~ 11. Changes in New Emission Test Cycle: NEDC vs. WLTP, Global, 2018~ 12. WLTP: Important Timelines for WLTP Adoption, Global, 2017–2022~ 13. WLTP: Financial Impact, Global, 2018–2020~ 14. Legislation Impact on Light Vehicle Fleet Leasing Industry: Notable Changes in Car Policies, Europe and Americas, 2018~
Author Gopi Sukumar
Industries Automotive
WIP Number MDE6-01-00-00-00
Is Prebook No
GPS Codes 9800-A6,9B02-A6