Wheels jan2013

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Qatar

WHEEL DEALS Mohamed El Talkhawi, general sales and marketing manager at Q-Auto, makes a case for leasing in Qatar

By Shereen D’Souza, Doha Leasing is conceivably the most viable option for those in the GCC who are unsure of the duration of their stay. Being a fairly new concept, it has been perceived to be a rather unsuccessful industry as compared to other parts of the world. Leasing enables one to drive brand new cars, or almost brand new, with practically no upfront cost and several added advantages like full insurance, services and maintenance on the company, warranty and so on. It hence seems quite unlikely that an industry with a high face value like car leasing should present any good reason for not being able to show decent growth curves.

Dealer

Brand

Lease?

Min

Doha Marketing Services Company W.L.L (DOMASCO) Q-Auto

Honda Volvo Audi Volkswagen Suzuki Citroen Ssang Yong Mercedes Nissan Infiniti Renault Dodge Chrysler Jeep Toyota Lexus GMC Cadillac Saab Hummer Land Rover BMW Jaguar Range Rover Mini Cooper

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes

3 ye 3 ye 3 ye 3 ye 1 da 1 ye 1 ye 1 ye 6m 6m 6m 1 da 1 da 1 ye 1 ye 1 ye 1 ye 1 ye 1 ye 1 ye 1 ye

Teyseer Motors W.L.L El Naeel /Company W.L.L Nasser Bin Khaledz(NBK) Automobiles SH Al Mana Co.

United Cars Almana(UCA)

Abdullah Abdulghani & Bros Co. Mannai Corporation

Alfardan Automobiles (Prestige)

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Lease?

Minimum term

Maximum term

Buyback?

Renewal on expiry

Corporate deals?

Down payment

Starting installment*

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes

3 years 3 years 3 years 3 years 1 day 1 year 1 year 1 year 6 months 6 months 6 months 1 day 1 day 1 year 1 year 1 year 1 year 1 year 1 year 1 year 1 year

3 years 3 years 3 years 3 years No term 3 years 3 years 3 years 3 years 3 years 3 years 5 years 5 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years

Yes Yes Yes Yes No Yes Yes Yes No No No yes Yes Yes Yes Yes yes Yes Yes Yes Yes

For 3 more years For 3 more years No No Yes No No For 3 more years For 5 more years For 5 more years For 3 more years For 3 more years For 3 more years For 2 more years For 2 more years For 2 more years For 2 more years For 2 more years

No No

20% 20% Nil Nil Nil Nil Nil 20% 20% 20% 20% 20%

QR 1,150

Leasing is only for Corporates

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

QR 2,500 QR 1,715 QR 1,600 QR 1,800 QR 2,130 QR 2,122 QR 3,100 QR 2,014 QR 2,990

*Rates calculated on a monthly basis for entry level cars of respective brands on a three-year lease term. Rates subject to change.

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“Leasing is a fairly new concept in the Middle East, it has been introduced several times but without the back up of knowledge of proper presentation as a concept,” says explains Mohamed El Talkhawi, general sales and marketing manager at Audi-Qatar (Q-Auto).

“Customers do not have the necessary information regarding how it can be implemented properly and how they can maximize the benefits of the concept into their buying experience. There seems to be a misconception about leasing, where the way of thinking revolves around the idea that an individual needs to pay monthly payments for the term of the leasing and will eventually give the car back at the end of the term of the lease and still have nothing owned that has any value,” adds Talkhawi.

While Talkhawi agrees with how leasing is rightly perceived, he feels the underlying financial analysis is wrong. For instance, a car worth QR 100,000 which will depreciate by 25 percent of its value in the first year, could be

is based on the normal methods such as using finance or cash deals,” says Talkhawi.

Leasing options are available to all individuals, albeit not suitable for all. The practise is more suited for corporates and businessmen, and individuals who prefer to change cars at regular intervals. In Qatar, several companies do offer various deals and discounts based on clientele. “We usually offer great seasonal deals and discounts mainly for the corporate segment. This is on a case-by-case basis and revolves around several parameters,” says auto dealer Saleh Al Hamad Al Mana (SH Al Mana) who are the dealers for Nissan, Infiniti and Renault in Qatar. Nasser Bin Khaled (NBK) Automobiles’ leasing service is available to all applicants and is subject to their normal credit procedures while SH Al Mana primarily divides this category into “short term rentals and long term leasing besides rental options for individual as well as corporate customers.”

Mohamed El Talkhawi, general sales and marketing manager at Q-Auto

if you want to consider getting a car beyond the warranty that the manufactures provide, you then might consider financing the car because you are not reducing your payments either way,” says Talkhawi.

As per the terms of a leasing contract, the underlying idea is, instead of paying QR 100,000 one pays QR 50,000 depreciation cost plus interest over three years, which one has to pay either way followed by a 10-15 percent depreciation rate yearly thereon. This would mean the car would lose around fifty percent (or QR 50,000) of its original market value, taking into account that the vehicle has not been exposed to any incident or modifications making it further lose value. As per the terms of a leasing contract, the underlying idea is, instead of paying QR 100,000 one pays QR 50,000 depreciation cost plus interest over three years, which one has to pay either way. “The difference is in the benefits like full warranty, full maintenance, full service and full comprehensive insurance for the term of the driving included, so why wouldn’t anyone want to lease,” asks Talkhawi.

Long way to go Leasing was introduced over 50 years ago in the USA, but it only picked up and became a performing sector over the last ten years.

Based on that, the GCC might still have a long way to go considering the US market took approximately 40 years to comprehend the benefits of leasing a car as opposed to owning one. “Right now leasing represents over 80% of the cars that are being sold in the USA, which is the market that I have experience in for 20 years. And it’s not a small market.

The United States sells an average of 15 to 17 million brand new cars every year. 80% of that is based on leasing, the remaining 20 %

Automobile dealers usually follow similar criteria for leases, besides the standard documentation procedures. Some of them have buyback options as well, subject to terms and conditions. “All our lease agreements allow the customer to hand back the vehicle at the end of the contract term. Additional charges may be applicable if the customer has exceeded the mileage limit as set in the contract, or if the car is returned in a state that does not comply with our fair, wear and tear guidelines,” reveals auto dealer NBK. Alfardan’s leasing department charges a 20 percent down payment for lease with option to buy and adds: “For a regular case, three months payment is required as a security deposit, refundable at the end of the term after deducting damages (if any). Payment terms are on a monthly or quarterly basis.”

Then of course, it’s all about making the right choice. “Make sure you get the right car to accommodate your wants and select a proper term to accommodate your needs. I don’t recommend people leasing cars beyond the warranty term, because it defeats the purpose. The beauty of leasing is to make sure the car you are driving is new all the time, but

Why not?

The industry is faced with several hindrances and lack of resources is one of them. QNB is the only bank offering a legal leasing contract while Doha Bank offers a buy-back program. Some companies however have their own funding services like NBK Services for instance. All this is subject to the Central Bank’s rules that govern which individuals do business with what bank besides other dealings. “This current rule set by the Central Bank limits the potential of creative auto retail banking with a great program like leasing and also limits consumers from taking advantage of these programs simply because it is not offered by their respective banks, so they have no access to it at all. It’s unfortunate, because if an auto retail bank has a good leasing program or something similar, they should be able to offer it to everyone in Qatar and of course this is subject to the bank covering their risk, by making sure that the customer is creditworthy. Let the competition be healthy, and let other banks compete; the biggest beneficiary will be the customer,” concludes Talkhawi.

www.bqdoha.com

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