CNH Industrial, the parent CNH Industrial of Case Construction Equipment, recently launched a so-called "New leasing scheme" to reduce the risk and burden of Equipment ownership on fleet owners. Kessnew Netherlands has long been active in the leasing industry through its dealer network.
Through its new leasing facility, CNH Industrial is offering a longer-term and more affordable case equipment leasing service to customers through its distributors.
Graziano Cassinelli, CNH Industrial;s head of global leasing and vice president of European sales, explained in an interview that the plan was"Tailored for dealers and leasing companies", with dealers providing the equipment, the devices are still part of the financing by CNH Capital, a Dutch financial institution.
"Together with CNH Capital, we have prepared a tool that offers 24,36,48 or 60-month lease options," he said
"What makes this programme so innovative is that it provides three important functions. First, it allows a dealer, a leasing company or a customer to terminate a contract before it expires."
Second, he referred to the company;s valuation methodology, which was based on the business value of the equipment, not the financial value, "We have created a presentation that looks at the true value of the equipment rather than the financial value, which is much lower."
"Basically, an operating lease typically rates the lease on a very conservative value," he continued. "The equipment has real commercial value, which allows the customer to get a long-term lease at a very low cost. If the lease is terminated before the end of the lease term, the customer has the option to purchase the equipment or return it to CNH. "Few financial institutions can provide tools to consider the commercial value of the equipment, and most only consider residual value, which is more akin to a financial repurchase."
Low-risk leasing had previously offered what he called a"Conventional financing" option of 12-or 24-month leasing options through dealers. Under this scheme, the customer owns the equipment at the end of the contract period. It is still available and works well. "It;s not the same as before," says Cassinelli, who has worked for caterpillar and its dealers for most of his career. "We call it the leasing mechanism, which is a way of leasing low-cost in a flexible way. The risk is borne by CNH, not by customers or dealers," he said, the company recently launched a line of electric compact wheel loaders in Lecce and has piloted the programme in the Iberian Peninsula, French, German and British.
Initial feedback indicates that the scheme has been particularly well received by leasing companies. He points to two main reasons. First, because the equipment is recorded on CNH Capital;s balance sheet, it does not appear as additional debt on the leasing company;s balance sheet. Second, the mechanism allows leasing companies to keep the equipment while allowing them to withdraw from the agreement without paying a penalty. "Think about when someone needs to terminate an equipment lease early," he said, "There is usually a huge fine. But in this case, there is only the administrative cost of ending the contract and terminating the relationship with the supplier."
On the equipment side, case equipment has a full portfolio to choose from, while Cassinelli said New Holland, another CNH Industrial subsidiary, was also ready to launch the programme in its construction equipment range. The company also launched an"Active activity" through a leasing mechanism for electric micro-excavators in the 1.5-ton and 2.5-ton ranges. Cassinelli describes it as a"Very aggressive campaign, ranging from 24 to 60 months, to offer very low rental rates to dealers and rental companies.". In addition to the equipment, the company also provides maintenance services to customers, but leasing companies also have separate options. "We are usually responsible for the maintenance and repair of the machines, but for the leasing companies, we offer a solution that does not include maintenance and repair, which means the leasing companies can carry out the repairs and maintenance themselves according to our guidance," he said, he said the plan would give the company, New Holland and CNH dealers access to more rental markets. "We want more leasing companies to buy from case and New Holland, so we;re not only putting a lot of effort into the product, we;re also putting a lot of effort into the financial side so that they can try Kes;s products without risk because they can make very simple comparisons."
He believes that risk reduction is another reason for the popularity of the scheme, particularly in the current economic climate, where some leasing companies have delayed capital spending on the fleet due to uncertainty, although some companies usually invest in January or February. ;more and more companies are diversifying in a more conservative way than before, ; he said. Looking ahead, he expects the scheme to be as successful as Kes;s dealer leasing scheme, but admits it is still in its early stages. "We are aware of the experience of the last few months in Spain, but of course we need to implement the plan to our team via the network and to market the product to customers and dealers, which will take some time," he said. "I have seen many plans in my leasing career but few plans to share the risk with the leasing company."