Leasing overview: growth in transport financing

Lithuania's commercial transport leasing portfolio is the largest among the Baltic countries. In the past year, over nine months, commercial transport leasing in Lithuania amounted to EUR 1.13 billion EUR (or 34% of the transport leasing market), while in Latvia this share was EUR 0.23 billion and, in Estonia, EUR 0.38 billion. Both Latvia and Estonia's commercial transport portfolios account for approximately 14% of the transport leasing market.

 "Financing in the logistics and transport sector is one of our bank's strategic directions and we pay significant attention to it, given that Lithuanian transport and logistics companies are among the largest in Europe. We aim to assist clients in continuing to grow, promoting sustainable solutions such as acquiring new trucks that are more environmentally friendly. We also observe the increasing interest in electric and hybrid trucks," says Leda Irzikeviciene, Country Manager of the OP Corporate Bank Lithuanian branch.

 According to our bank's analysts, the sales of electrically chargeable trucks in Europe last year were five times higher than four years ago, constituting 0.6% of all newly sold trucks.

 In Lithuania, commercial transport leasing represents almost the same market share as light vehicles. Over the nine months of the past year, light vehicles in Lithuania were leased for EUR 1.42 billion (or 43% of the transport leasing market), in Latvia for EUR 0.9 billion (56% of the market) and in Estonia for EUR 1.56 billion (59% of the transport leasing market).

 The market for automotive and equipment leasing grew in all Baltic countries last year. The results for nine months in Lithuania and Latvia in 2022 already exceeded the achievements of previous years by 16.2% and 11.2%, respectively. In Estonia, at the end of 2022, compared to 2021, this market grew by 8.7%, according to our bank's analysts.

 Last year, Latvia was the only Baltic country to increase the volume of new light vehicle sales by 16.5%, while in the other two countries there was a decrease. For the first time in four years Lithuania and Estonia had lower indicators than Latvia, even though previously Lithuania purchased up to four times more new light vehicles than Latvia.

 Throughout Europe, the transition to electric light vehicles is gaining momentum, reducing carbon dioxide emissions. Last year, 44% of light vehicles sold in Europe were electric with batteries, hybrid electric, or rechargeable hybrid electric vehicles. A year ago, this share of sustainable vehicles accounted for 38% of all newly acquired vehicles.

 The electrification of transport in Europe is lagging behind infrastructure development. Nearly half (42%) of all European vehicle charging stations are in the Netherlands and Germany. The Baltic countries, Cyprus, and Malta currently have the fewest stations in Europe.

 Analysts note that the size of the electric vehicle market directly correlates with the per capita GDP and affordability is a significant obstacle for residents to switch to electric vehicles.

 "Nevertheless, this will have to be done because, according to European Union requirements, the sale of new vehicles with internal combustion engines, except those powered by climate-neutral synthetic fuel, will be prohibited from 2035 onwards," says Liga Redliha, our bank's analyst in Latvia.

 According to her, significant investments will be required by 2030, with the introduction of the new "Euro 7" vehicle emission standards.

 In summary, it can be stated that the transportation industry worldwide has recovered from the challenges posed by the COVID-19 pandemic and disruptions in supply chains, which led to a contraction in transportation production. Preliminary data indicates an 8% increase in global passenger transport production last year. Correspondingly, the leasing market is also growing.