CNH Industrial NV

Note 8: Leases

Lessee

The Company has operating lease contracts mainly for buildings, plant and machinery, vehicles, IT equipment and machinery.

Leases with a term of 12 months or less are not recorded in the balance sheet. For the leases the Company recognized, on a straight-line basis over the lease term, the Company incurred lease expense of $10 million and $13 million for the year ended December 31, 2023 and 2022, respectively.

For the year ended December 31, 2023 and 2022, the Company incurred operating lease expenses of $93 million and $74 million, respectively.

At December 31, 2023 and 2022, the Company recorded approximately $297 million and $225 million of a right-of-use asset, respectively, and $300 million and $228 million of lease liability included in Other assets and Other liabilities, respectively. At December 31, 2023 and 2022 the weighted-average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted-average discount rate for operating leases were 5.6 years and 4.4%, and 5.9 years and 3.8%, respectively.

During the year ended December 31, 2023 and 2022, leased assets obtained in exchange for operating lease obligations were $153 million and $114 million, respectively. During the year ended December 31, 2023 and 2022, operating cash outflow for amounts included in the measurement of operating lease obligations was $90 million and $73 million, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows:

Lessor

The Company, primarily through its Financial Services segment, leases equipment to retail customers under operating leases. Our leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenue for non-lease components are accounted for separately.

A summary of equipment on operating leases as of December 31, 2023, and 2022 is as follows:

Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $187 million, $207 million and $241 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table sets out a maturity analysis of operating lease payments, showing the undiscounted lease payments to be received after the reporting date: