Dh10m Shariah-compliant car leasing firm launched by DIB |
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Dubai Islamic Bank (DIB)Dubai Islamic Bank (DIB)
yesterday launched a Shariah-compliant car leasing company in a move to increase its foothold in the automobile financing market. The new entity, Emirates Leasing, will have a start-up capital of Dh10million and will cater to the small, medium and large business corporate as well as to government sectors.
Jan A Husing, CEO of Emirates Leasing, said the company will be fully independent and will have no association with a particular automobile manufacturer. He said the company will find a niche in the untapped leasing market by providing fleet management system services and sale and lease-back of cars and light commercial vehicles.
"The car leasing business is a booming business and this market currently doesn't really exist," he said, adding that the company aims to close that gap.
Husing, citing a report from by Business Monitor International, said about 270,000 cars have been sold in 2007 with Dubai holding 50 per cent of the stocks. The automobile market in the UAE has been increasing by 13 per cent a year, with two-thirds of the sold vehicles being financed. The UAE's auto-finance market has reached $2.1 billion last year.
"DIBDIB
is quite strong in auto-finance and with Emirates Leasing, we will further increase DIBDIB's market share in this sector," he said.The leasing concept will be supported by a fleet management system, which Husing said is not yet being used in the Middle East.
"According to our research this similar system doesn't exist here in the Middle East and there are only some few providers in the world," he told Emirates Business. "B2B companies are not necessarily a specialist in the fleet business. So we have secured a very extensive IT system which is not available for everybody. It doesn't make sense for companies on other market segment to buy such an IT system and maintain it."
The system, he said, will efficiently manage and optimise corporate fleets, provide cost effective solution with a saving potential of up to 35 per cent per year compared to existing offers in the market.
The system, however, does not incorporate a tracking device. "We are a financial company and we do not want to go out from our core competence that is why we did not include heavy vehicles in our portfolio," he added.
Unlike rental companies which procure cars in bulk and provide cars for short-term use, Emirates Leasing will procure vehicles on order and lease duration is typically 24 to 36 months.
It provides full-service vehicle leasing including maintenance, accident management, insurance, registration, tyre replacement and relief vehicle. Clients will also have the option to choose services and pay for only those services.
"We cannot divulge our future size but we will definitely secure a reasonable market share," Husing said. "Currently we are the only Shariah-compliant vehicle leasing company in the UAE and we aim to satisfy clients' mobility requirements, minimise fleet costs and improve mobility efficiency of our customers."
By Karen Remo-Listama
© Emirates Business 24/7 2008
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