site.btaExpert Talks about Possible Drop in Lease Rates, EV Sales

Vladislav Damaskinov, Co-chairman of the Bulgarian Association for Leasing (BAL), told BTA's Kamelia Tsvetanova that if the trend of falling inflation, stabilizing supply of vehicles and machinery, and reduction in EURIBOR and in the base interest rate by the Bulgarian National Bank (BNB) continues, leasing companies may consider lowering interest rates.

About 70% of all lease sales involve cars and light trucks, while equipment, heavy machinery and a very small percentage of real estate account for most of the remaining 30%. This is a trend not just in Bulgaria but on the European market in general, the expert said.

Although the BNB has reduced the base interest rate for two months in a row, this has not had a tangible impact on lease rates yet.

In general, the price of leasing depends on three key factors: the price of the item (a vehicle in most cases), the servicing costs, and last but not least the cost of financing, Damaskinov explained. While the first two factors are directly related to inflationary processes, the cost of financing is indirectly related to inflation through the base interest rate (and hence lending rates).

EV sales

By mid-2024, electric vehicle sales were comparable to 2023. The Bulgarian market for EVs is extremely small - it accounts for about 5% of new car registrations, the expert said. If there is 30-40% year-on-year growth in some months, it is due to one or more large fleet deals.

The main hurdles to a substantial increase in EV sales are the lack of charging stations and the high price of the vehicles.

"In this sense, leasing companies are a natural partner of the state, individuals and companies in their drive for more economical and greener mobility. BAL was involved in discussions on an Electric Mobility Bill that would have laid the groundwork for incentives for EV sales and use. Regrettably, it was not adopted, but we hope the Innovation and Growth Ministry and Parliament will manage to finalize it. Such a law would provide for incentives that will reduce the price burden of acquiring an EV, regulate the number and placing of charging stations, and further develop the incentives for choosing electric mobility," said Damaskinov.

He stressed that leasing companies often offer special preferential terms for leasing EVs, and act together with insurers for EV insurance. Thus customers can spread the cost of the purchase in installments.