Sweden: Unravelling disputes and trends in the leasing market 

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In a story reported last year by Swedish motoring website Teknikens Värld, a dispute involving Peugeot Finans, a subsidiary of DNB Bank, has drawn attention to the complexities within the realm of lease agreements against the backdrop of rising interest rates. 

The story revolves around Mats Jonas Danielsson, a leaseholder of an electric Peugeot e-208, who expressed dissatisfaction over an abrupt rent increase from SEK 3,765 to SEK 3,999 per month. 

The disagreement stemmed from Danielsson’s expectation of a fixed-rate lease, which clashed with Peugeot Finans invoking a clause tied to rising borrowing costs. 

Danielsson, under the belief in a fixed-rate lease, contested the sudden adjustment. 

However, Peugeot Finans justified the increase, referencing contractual clauses that granted them the authority to adjust fees based on financial factors. Unaware of this clause at the time of signing, Danielsson sought intervention from the General Complaints Board to challenge the lease adjustment. 

The General Complaints Board ruled in favour of Danielsson, emphasising a 2005 Supreme Court precedent that places the burden on the lessor to substantiate fee increases. 

The Board found DNB Bank’s failure to provide evidence as grounds to reject the immediate rent hikes, resulting in a partial victory for Danielsson. 

The outcome prompts reflections on the need for transparency in lease agreements and a clearer distinction between variable and fixed leases. DNB Bank, dissatisfied with the ruling, has requested a review, prolonging the legal process. 

The current economic climate clearly poses significant challenges for the car leasing market in Sweden, with a reported 20% decline in private car rentals in 2023 compared to the previous year. Simultaneously, the landscape is witnessing a substantial surge in advertisements for car leasing transfers, tripling in number over the past year. Private leaseholders, grappling with long remaining commitment periods, are actively seeking avenues to terminate their contracts. 

Historically, the automotive sector has stood as one of the pillars of the Swedish leasing market, housing major foreign manufacturers and finance providers. Volkswagen Financial Services (VWFS), a local heavyweight, notes the demand for leasing new cars among private customers is declining due to broader market conditions, while the appetite for used car leasing is on the rise. Interestingly, corporate demand for full-service leasing remains stable. 

VWFS anticipates a trend towards used car leasing, car sharing, and subscription offerings in the coming years. Despite potential decreases in demand from specific fleet market sectors, the overall business customer market is expected to maintain relative stability. 

Beyond automobiles, leasing is making inroads into diverse segments of the Swedish economy. Aviation, in particular, has become a notable domain, with reports indicating Sweden’s emergence as a hotspot for aircraft lease-in and lease-out (LILO) special purpose vehicles (SPVs). These SPVs offer lenders various advantages, including tax benefits. Notable deals in this sector include the acquisition of up to 40 regional electric aircraft (the ES-30) by the Swedish investment and aircraft leasing company Rockton. 

Furthermore, leasing has expanded into unexpected territories such as tractors and agricultural machinery. Leading local leasing companies are strategically directing marketing campaigns to attract farmers, signalling a broadening scope for the leasing industry. 

Richard Jonsson, Managing Director of GRENKE Sweden, emphasises the role of leasing in the era of digitalisation and sustainability. In times of economic uncertainty, leasing solutions serve as growth levers for companies, allowing for smoothed-out expenses throughout the year and preserving debt capacity, he says. 

Jonsson notes a significant shift towards electric mobility, manifesting in a sharp increase in e-bike leasing. Many companies in various sectors are embracing green solutions, increasingly financed through leasing. Leasing and renting, Jonsson suggests, can act as catalysts for sustainable business practices, especially for small and medium-sized enterprises (SMEs). This financing approach provides a stronger incentive to adopt the latest and most energy-efficient equipment and machinery. 

Magnus Segerdahl, DLL‘s General Manager for the Nordics, remains optimistic about the outlook for leasing services in Sweden, attributing resilience to the country’s well-developed economy. Major investments in artificial intelligence (AI) and digital technologies are underway, with a focus on combatting anti-money laundering and enhancing compliance fulfilment for businesses. 

Segerdahl envisions AI taking the industry to new heights, with a heightened focus on circular economy solutions and as-a-service arrangements. These, he believes, will be pivotal for business development in the years to come, with expectations of continued growth.