A conversation with Dr. Claudia Conen, Managing Director of the Federal Association of German Leasing Companies (BDL), about 60 years of Volkswagen Leasing, the importance of the industry for small and medium-sized enterprises (SMEs), and the future of leasing.
Ms. Conen, Volkswagen Leasing is celebrating its 60th anniversary. How significant was the founding of the company for the development of the German leasing market?
It's important to remember that leasing was still a very new financing model in Germany at the time. The concept originated in the USA, where Carl Hahn [Editor's note: Carl Hahn was CEO of Volkswagen AG from 1982 to 1993 and became head of the Volkswagen Group of America in 1958] had encountered car leasing and recognized its potential. While leasing was already established in the USA, it was initially seen in Germany – during the time of the "economic miracle" – primarily as a financing solution for companies with limited financial resources. It was not until the 1980s that car leasing achieved its breakthrough in Germany. In this respect, Volkswagen Leasing made an important contribution to making leasing a normal and acceptable option in German society.
Did this development also influence the spread of leasing in other economic sectors?
I'm convinced it did. When a good solution establishes itself in the market, it can also be applied to other products and categories of goods. Car leasing served, in a sense, as a blueprint for other capital goods. As early as the 1960s and 1970s, for example, mainframe computers and IT systems, as well as investments in modern typesetting and prepress technology, were financed through leasing. The basic principle always remained the same: companies could use modern technologies without having to bear high upfront acquisition costs all at once. In this way, leasing not only facilitated investments but also helped bring new technologies to market and into day-to-day operational practice more quickly. This function as a gateway to technological progress contributed significantly to the widespread establishment of leasing as an investment instrument.
What role does leasing play specifically for the German SME sector?
SMEs are the backbone of the leasing industry, and vice versa. The leasing industry is strongly SME-driven. At the same time, more than 90 percent of all leasing contracts are concluded with SMEs. This mutual acceptance and understanding also facilitates eye-level dialog and collaboration. Leasing enables companies to invest in modern technologies without having to tie up large amounts of capital or take on additional loans. This keeps them financially flexible. Incidentally, in a recent BDL study, 77 percent of the companies surveyed stated that leasing helps them remain competitive.
What has surprised you most about the leasing industry?
When I joined the BDL six years ago, what struck me most was the diversity of the industry. Our association comprises around 140 leasing companies – ranging from small, specialized niche providers to international corporations. With its mix of bank-affiliated, manufacturer-captive and independent leasing companies, the industry is a very good reflection of Germany's SME landscape. But what I also find fascinating is the variety of the leasing objects. A lot of people initially associate leasing with cars. In reality, the spectrum is much broader: it extends from cars, machinery and medical technology to IT and communications technology, charging infrastructure, ice cream machines, and even the Ferris wheel at the fair.
You're in regular contact with policymakers. What are the most common misconceptions you encounter?
In the past, leasing was often seen merely as an alternative to bank loans. But in fact, leasing is much more than that. Leasing companies possess a high level of expertise regarding the specific assets, understand the respective markets, and advise their customers on investment decisions. As a result, they are often able to help realize projects that traditional lenders are more hesitant to finance due to a lack of industry or asset-specific knowledge. That's why leasing bridges the real economy and the financial sector in a uniquely meaningful way.
Another important point is that a leasing installment covers far more than just interest and principal repayment. For instance, leasing companies assume risks related to the value performance of the assets and offer additional services and support. That's why we view leasing not as a substitute for credit, but as part of a long-term investment partnership.
Private customers are also increasingly opting for leasing. Why is that?
Customer expectations have changed. In the past, the focus was on financing the vehicle itself. Today, flexibility, service, digital processes and predictability play a much bigger role. Customers want to drive modern vehicles, know their monthly costs, and minimize the effort involved in maintenance or administration.
At the same time, the traditional ownership mindset is increasingly taking a back seat. Many people want to use a vehicle that fits their current life situation rather than committing to a specific model for many years. This, too, enhances the appeal of leasing.
What is the significance of captive companies like Volkswagen Leasing for the mobility ecosystem?
Captives are a central component of the market. Around 60 percent of new mobility business is brokered through manufacturers and dealerships. This is the industry's largest sales channel. For manufacturers, captives serve as a strategic tool to bring vehicles and new technologies to market and build customer loyalty.
Customers receive an all-inclusive package comprising the vehicle, financing, insurance, maintenance, and additional services. For the leasing market as a whole, captives are key drivers of innovation. Companies like Volkswagen Leasing have decades of experience, a deep understanding of the market, and extensive competence in the mobility domain.
As a representative of the association, it's important to me to keep the overall market in view. Besides captives, bank-affiliated and independent providers also define the leasing landscape. It is exactly this mix that makes the German market strong. Different customers need different partners.
What trends will shape the leasing industry over the next ten years?
I see four major themes here: new technologies, sustainability and the circular economy, new usage models, and digitalization. Innovation cycles are getting shorter and shorter. Companies need access to new technologies but don't want to commit long-term. Leasing offers ideal conditions for this. At the same time, issues like resource conservation and the circular economy are gaining importance. Leasing traditionally already thinks in terms of product lifecycles and can therefore make a significant contribution to sustainable business practices.
In addition, new models such as pay-per-use or asset-as-a-service are emerging. The shift away from ownership and toward usage will continue. Parallel to these developments, digitalization will profoundly transform the industry – ranging from digital contract processes and data-driven risk models to the use of artificial intelligence in customer processes.
What would you like to wish Volkswagen Leasing on its 60th anniversary?
I wish Volkswagen Leasing and all its employees innovative strength and spirit, the courage to embrace change, and entrepreneurial foresight. Above all, I hope the company has the ability to identify new developments at an early stage and create solutions based on them that help both customers and the company move forward successfully.
Mrs. Conen, thanks a lot for the interview!
