Enhancing profitability and trust in vehicle leasing with data-driven valuations

• Boosting profitability with precision: 

Calculate accurate residual values using real-time data, boosting ROI and reducing financial risk.

• Innovating and expanding offerings: 

Develop flexible, tailored leasing products with new potential partners, opening new revenue streams beyond traditional agreements

• Building unprecedented trust: 

Offer transparent, verifiable vehicle histories via data collected from digital product passports, strengthening client relationships.

• Ensure secure and compliant data use: 

Build client trust by being able to protect sensitive data with Multi-Party Computation (MPC) and Confidential Computing, also ensuring full regulatory compliance.

• Achieving a competitive edge 

Maximize vehicle lifecycle value by continuously tracking vehicle value and condition to optimize fleet management and remarketing.

Despite this opportunity, leasing companies still face a persistent challenge: accurately figuring out what a vehicle is truly worth at the end of its leasing period. Traditional methods, that rely on broad market estimates or general depreciation schedules, often miss the actual market and the conditions of a car. They typically don't account for how a specific car was actually used and cared for during the previous and its current leasing period. 

This can lead to a few problems: either a leasing company underestimates a car's value and leaves money on the table when it's returned, or you overestimate and end up with losses if the vehicle comes back in worse shape than expected. Plus, it limits how flexible you can be with lease agreements, making it harder to offer personalized terms that truly fit your clients' needs. And without clear, verifiable data, building full trust with clients about end-of-lease costs can be tough. Ultimately, this means less predictable revenue and missed opportunities for deeper Client engagement.

Imagine being able to use real information rather than prefixed general market assumptions, tapping into the unique, real-time data each car generates. This transforms the car's "black box" containing various information into a strategic asset for your company's leasing operations. For leasing companies this means achieving more precise valuations and opening completely new paths to revenue streams and client trust, supporting the automotive industry's need for long-term value from its cars.

This will be possible by providing each car with what is referred to as a digital product passport, essentially a unique digital identity based on NFT technology.

This product passport records the car's entire life - from manufacturing details to its full maintenance history, driving behaviors, and even real-time condition metrics such as . What is crucial for this digital passport to secure value is that it will be placed on a public blockchain, allowing transparent tracking of each car's unique journey.

Anyone can look at it, trace its history, and even see small but important information like if the car was taken to the mechanic as required knowing the information can be trusted. 

This product passport system then integrates critical factors that directly influence a car's true worth. Including insights into the driving style (like acceleration,braking habits, and total mileage), its maintenance and servicing history, specific wear - and - tear metrics, and even eco - driving behaviors.

All of this helps establish a realistic and transparent residual value for every car. As we all know, the value of a car changes over time.

This approach allows leasing companies to make ongoing, data-driven calculations that reflect real-time conditions and changes - rather than relying on a fixed 4–5 year period and predefined standardized checkboxes. 

As a leasing company a data-driven approach brings clear benefits to your operations, directly impacting your financial performance and return on investment.

First, you get optimized residual value calculations. Imagine moving from assumptions and best guesses to validated precision; you can calculate a highly accurate residual value for each individual car based on its actual use and condition. This directly translates into a higher return on investment per car by reducing the financial risk from unexpected wear and tear, allowing for more competitive yet profitable leasing rates, and ultimately maximizing your returns on returned cars in the secondary market.

Second, it allows for the creation of flexible and tailored leasing products. With granular data on driving behavior and how well a car is cared for, you can design innovative lease structures.

Think about dynamic pricing models, usage-based leasing, or offering incentives for responsible driving during leasing periods. This can attract a wider range of clients, improve client satisfaction with personalized options, and open up brand new revenue streams beyond your current traditional fixed-term leases, contributing to overall revenue growth.

Finally, you achieve enhanced transparency and build stronger client trust. By using a public blockchain for the digital product passport, the car's history becomes traceable and auditable. This is done without ever revealing personal data, so you can clearly show clients a verified record of the car's condition. This transparency builds stronger relationships and makes end-of-lease discussions smoother.

It also boosts resale value and speeds up the remarketing process for cars coming off lease, further improving profitability. For car manufacturers, this robust data can even facilitate new approaches to customer loyalty, allowing them to invite high-value or responsible drivers to special events, building a stronger community around the brand and fostering long-term value.

Overall implementing this solution utilising data provides a competitive advantage and a strong negotiation position for leasing companies with their clients, who are themselves becoming increasingly digital. Before leasing a car, they often conduct extensive research and already have a clear idea of its value.

By leveraging data typically unavailable for both parties - enabled through the digital passport - you as the leasing company can demonstrate that your pricing and leasing terms are based on real-time, transparent data. This builds trust and positions you ahead in a highly competitive market.

Crucially, respecting data privacy is the heart of this solution. The underlying technology ensures that sensitive data stays protected while still generating valuable insights.

This can be achieved by using Confidential Computing to securely integrate data from multiple sources like financing partners and insurance companies, processing it in an encrypted environment.

On top of that, what is referred to as Multi-Party Computation (MPC) ensures complete data anonymity throughout. This means raw data from individual cars or drivers is never exposed to any single party – not even the technology provider or the leasing company itself. Only the aggregated results and valuable insights are revealed. Plus, this system is built to comply with strict data protection regulations like GDPR, giving clients peace of mind.

By adopting this approach, you're not just predicting the future of car leasing – you're building the future of it. It gives your company the tools to turn raw car data into a powerful asset, driving profitability and trust in every leasing agreement.

To explore how you can start to benefit from this, we invite you to book a free demo.