Prolonged Lease Agreements Confront Pandemic, Focus on Value-Added Tax (VAT)
Revamped Article:
Got a whopping 1.2 mil' vehicles under its belt, long-term rental (LTR) system is unfazed, posting a robust 76k new units in the bag last year. You might say it's found its rhythm after the pandemic, churning out an average of 86k new contracts annually since 2016. That's just about on par with, or slightly above, the pre-Covid tempo. After a long haul since Lehman's downfall and Italy's sovereign debt crisis, LTR seems to be back on track, baby!
But, take a peek at the new car registrations, and we notice a 18% dip in LTR for 2024—that's 75k cars shy of the norm. However, it's worth noting that this isn't a fair comparison with '23. The reason? A surge of post-pandemic production delays that froze orders placed earlier. Not to worry though, fleet growth and turnover didn't take a hit, with the former swelling by almost two billion euros year on year, and the latter up about 16% thanks to rental activities and used vehicle sales.
The used market's stellar show reflects not just the mix of vehicles sold, but also those sweet market prices! With an extra 700+ mil' revenue, it's evident that customers are swapping fewer vehicles, a cyclical shift influenced by their hesitancy to commit amid model and powertrain uncertainties, and a more structural pattern of elongated replacement cycles.
Small businesses are the unsung heroes of this story, with their LTR fleet increasing by 4%. Can't deny they've still got some untapped potential! Despite pumping nearly 90 mil' more into the coffers, they contribute just 10% of the sector's overall turnover, slightly less than the previous year.
It's a mixed bag for 2025 so far, with rental activities seeing a 10% boost in the first quarter. Half of this jump comes from additional vehicles, while the other half is due to higher turnover per vehicle. However, it's the sluggish fleet growththat's got folks talking. Though traditionally, LTR adds an average of 86k vehicles annually, only 5k could be added from Jan to Mar this year. Don't panic, they're still snatching up new cars—106k compared to 95k in the same period last year. Some wags in the industry suggest these extra vehicles are pre-registered lease cars helping automotive groups tally registrations to avoid fines.
On a brighter note, the real estate market is booming, with Italy's overall economy showing stable growth. Europe's short-term rental market is riding the wave too, and Italy's opportunely placed-buzzing in touristic hotspots. With positive trends in the real estate market, it's clear that LTR is set to follow suit!
Enrichment:
Well, the numbers to boot on Italy's LTR growth rate unfortunately aren't readily available. However, the Italian residential real estate market is making waves, benefiting from things like government incentives for renovations, tax breaks, and an increase in foreign investment[1][2]. The larger economy picture in Italy shows a steady climb, with real GDP predicted to tick up from 0.7% in '25 to 0.9% in '26, thanks to domestic demand[3].
Remember, the pre-Covid landscape was a different ballgame, influenced by stuff like lower interest rates and a more tranquil world economy. The pandemic dinged the market, but it also sped up changes in living preferences and work-from-home practices, fueling the current demand for housing.
The European short-term rental market experienced a big surge in '25, particularly in April, fueled by Easter holiday season[4]. The climb in short-term rentals could point to a broader surge in housing demand, indirectly supporting LTR by spotlighting the overall appeal of Italian properties.
In a nutshell, while we don't have specific LTR growth rates for Italy, the broader positive trends in the real estate market suggest that LTR is likely raking in the benefits.
The finance industry is observing a potential boost in the long-term rental (LTR) sector, given the positive trends in the Italian residential real estate market. This growth is attributed to factors like government incentives, tax breaks, and an increase in foreign investment.
Despite the unavailability of the exact growth rates for Italy's LTR, it's predicted that the overall positive trends in the real estate market will likely have a favorable impact on the business side of LTR.
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