News I published 05 November 2023
Leasing of installation products will likely grow in the future
Services are increasingly important for brands of installation products to distinguish themselves from the competition. That increase coincides with the trend of servitization in the economy at large. Ownership is getting less dominant, as it is becoming more and more normal to sell access to products as a service.
These days, it is getting rarer to pay for ownership of a movie, for instance, and more common to pay a monthly fee to a streaming service to get access to all sorts of movies. Similarly, it is becoming more common for consumers to pay a monthly fee to lease a car instead of coughing up the entire sum to own the car.
But what about the installation industry? For the European Mechanical Installation Monitor, we asked HVAC installers and plumbers from six counties to what extent the leasing of products is desired or offered as a service.
Leasing is not offered much yet
When asked to what degree installation companies offer leasing of products to their clients, it appears that installers from Germany, Belgium, and the Netherlands offer this service most often. The actual figures show that most often is not that often, though.
In Germany, for instance, where leasing is most common, only 17% of installers offer leasing products to their clients. Next come Belgium and the Netherlands, where the share of installers offering leasing to their clients will increase to 13% in 2023. In the other three countries, the share of installation companies that offer leasing is significantly lower.
Leasing will likely get bigger in the future, though
Although leasing is not offered much yet, leasing products will likely become more common as they offer solutions that align with the trend towards sustainability and the energy transition. The installation sector is in the vortex of moving away from fossil fuels and towards electrical solutions like heat pumps, for instance. However, these new solutions often require hefty initial investments.
For people who do not have that kind of money lying around, leasing offers the option to make use of more sustainable installations for a monthly fee. Given the vast number of new installations necessary to achieve the energy transition and the fact that many people may not be able to afford the investment to own those new installations, this is an area where we will expect interest in and offerings of leasing products to grow
Manufacturers can play an important and lucrative role here
There is another indicator that leasing will grow in the installation market. We measured installers’ interest in certain services and offerings from manufacturers of installation products. In all six countries, interest in manufacturers offering products that installers’ clients can lease instead of buy is still on the low side but is growing rather significantly.
For manufacturers, offering the usage of a product as a service is very interesting, as it has the potential to generate much more revenue than just selling the ownership once. As the manufacturer remains involved, leasing also provides more efficient ways of reusing materials from old installations when they are replaced. As such, leasing contributes to circularity at a time when materials are often in short supply.
Altogether, manufacturers should be aware of the potential that leasing their products via installation companies may have for generating revenue and adding value to their brands in the years to come. For an overview of installers’ interest in all kinds of services from manufacturers, we refer you to the Q2 2023 report of USP Marketing Consultancy’s European Mechanical Installation Monitor.
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