13 minute read
FLEET FINANCING
FLEET FINANCE: ARE WE MAKING PROGRESS?
Patrick Ger Regan, founder, SAMA Capital Equipment Management, says that flexibility is needed to make the most of changes to financing in the UAE
Most of the recent regulatory changes that have happened in the UAE over the last 14 months, and during the Covid-19 period have mostly kept under the radar. You may have read about them, but how do these impact your business?” Asks Patrick Ger Regan, managing director and founder, SAMA Capital Equipment Management.
Regan, an advisor of regulatory changes to equipment financing in the UAE, recently started the business having left the banking and finance sector with the “objective of raising liquidity in the market by finding routes for equipment and vehicles” to get into, what he defines as secondary global markets. He has also developed a corporate financing model, he says, that integrates with distributors and OEMS to support their fleet and contractors through the maze of debt financing and equity releasing when a project or lease term ends.
He starts with some advice for those supplying the market: “When an OEM or distributor meets their customers, the key themes they need to be addressing are on how liquidity is impacting the business, whether they’re struggling or whether they’re flying.”
Having departed his role in equipment financing for a major UAE bank, Regan
says SAMA is already partnering with banks, financial companies and leasing companies to look at ageing or stressed assets and recovery, as well as debt management, repossession, liquidations.
This may sound intimidating like finance jargon to those buying or leasing equipment and vehicles, but Regan hopes that changes in the market can protect the complete chain of businesses involved in the sector – if they understand how to use them.
“It’s all part of the UAE regulation that’s being imparted over the last 12 months. It has changed the way we go about doing business,” he explains.
SAMA is working with Invigors EMEA, a global leasing and asset management consultancy firm, to try and help the delivery of future regulation and changes in the region.
“Being able to bring someone like Invigors to the table, helps to try and see where we can impart this regulatory position and how distributors, OEMS and their family-owned partners can look at the risk management side; the operational function and how you can go about installing change and how it is going to impact your business.”
The past few years has seen the introduction of the Emirates Movable Collateral Registry which has enabled banks to recover assets in the event of a default on a loan or mortgage. Regan explains that distributors and importers should be using the mechanism to add a layer of security to their lending.
He adds that he has seen an alignment between insolvency and bankruptcy laws in the UAE over the past 12 months, and this is leading to a change whereby a default on a loan no longer needs to be resolved in court.
“In the event of a default – or in the event of challenges that a client has – the courts are no longer the first point of call. It’s important to instill the mindset that lenders must take steps to provide clients with some form of self-remediation. There has got to be some form of steps taken to support the customer and help that SME survive.”
He tells distributors: “You may have a certain quantity of fleet on finance with the bank and you may have a certain amount of fleet on book with yourselves. Now, how do you integrate when a both channels of recovery are coming through different paths? There are now steps to be taken in liquidation to ensure secured assets obtain their maximum value. It’s not a case of bounce a cheque, go to court and shut the company down. There’s now steps to be taken to relieve that pain point.”
Regan says there are now 841 articles to be complied with under the latest consumer protection laws in the UAE.
“Now, depending on your position as a distributor, you may have finance partnerships in place for a self-employed customer when they come to buy a 4x4, or a crew cab and pickups. In the future, your finance partners are going to have to go through a number of additional key steps such as understanding the loan, the cost of the loan, and more. It’s not just a case of submit bank statements, off you go and the loan is approved. All aspects have to be disclosed to the client before a finance loan can be taken on a particular vehicle.”
Having given an overview of current law, he says sources for funding of loans are now much thinner on the ground. In the past five years, the UAE market has seen a reduction from 13 banks and half a dozen other financial institutions to just nine active banks to turn to.
“These were major sources of funding for SMEs and this is something we are going to have to address. In comparison, with the impact of new financing regulation, in Saudi Arabia there are now 20 institutions. Granted,
SIGNS OF IMPROVEMENT
Regan has high hopes that incoming UAE leasing laws will reflect the way distributors are broadening their financing options and will allow for greater flexibility in liquidating assets such as vehicles. the market is a lot bigger but there are 13 finance leasing companies that are purely working with a distributor or an OEM to directly and actively lend in the SME space.”
The current challenge then for distributors in the UAE is how to balance ensuring vehicles and equipment keep moving in the market – and a source of revenue – with the complexities of understanding resale values down the line and the pitfalls of new financing or lease-to-own models they may not be set-up to handle. Fortunately, he says moves are being made at a regulatory level that could ease funding in the market.
“We had to go back to the drawing board again. During the course of 2020, I made it my business to really integrate myself into where the law was at, what was happening with it; how it is being written, and who was in control of it? By the end of last year, the law has been rewritten as per the Ministry of Finance – and with support of the international Finance Corporation – and the expectation is that a draft of the revised law is to be implemented this year.”
“Within the UAE leasing law, we need to see, clinically, a recognition of the structures of modern finance lease concepts; definitions of duties, provisions for lessee duty to pay; a lessors lack of equipment responsibility post-acceptance; a lessee to have stated recourse against the supplier; the equipment not to be liable to other creditors; evidences of a assign-ability. And, most importantly. it must have expedient measures for repossession in the event of default.”
Through his work with government agencies and the OEM/distributor channel, Regan believes that there is an opportunity for collaboration that could make funding not only easier but far more flexible.
“What we’re trying to establish is a roadmap towards flexibility and opportunity and I believe we’re getting there. But the biggest challenges are across operational structure...the regulatory governance, the risk management side of it and then the legal application side of it.
“I’m trying to achieve what all distributors, SMEs in this region want, a model of flexibility within deals, where three trucks could be financed for a period of four years, but after two years, they can be handed back and three are handed out again.
“What we need to do now is sit down with the industry and see how we can implement it.”
THERMO KING UPGRADES ATHENIA / AUTOCENTRAL AND BAIC MAKE DEAL / BENTLEY AND CONTINENTAL SEAL PARTNERSHIP / JLR USING FCEV ON DEFENDER
WORKSHOP
Athenia gets a fine tune
THERMO KING’S NEW SYSTEM PROMISES TO BE A BREATH OF FRESH AIR FOR HYBRID AND ELECTRIC BUSES
AIR COOLING
Thermo King has introduced a new CO2 sensor to its Athenia MkII Electric heat pump range for hybrid and electric buses. The new sensor optimises the fresh air ventilation rate and increases the air flow by actively monitoring and controlling the CO2 levels inside the bus.
The company further explained that the sensor helps maintain the right balance between the ventilation rate and energy consumption of the HVAC unit, while also positively impacting the driving range of the electric bus.
“Traditionally, HVAC systems designed for electric buses manage the energy consumption in order to extend the driving range of the bus. This often means reducing the amount of fresh air entering the passenger area,” said Peter Hansen, product leader at Thermo King Marine, Rail and Bus. “Industry and health organisations recommend increasing fresh-air supply and improving ventilation of closed spaces as one of the contributors to decrease potential airborne transmission of viruses. We designed the new sensor to better monitor and control CO2 and aerosols levels inside the bus, and more efficiently manage the ventilation flowrate.”
The Thermo King CO2 sensor is easy to install and was designed to work with the Thermo King CAN communication system. If the bus is already equipped with a CO2 sensor, upgraded Thermo King proprietary monitoring software can be uploaded and enable the new features.
According to Thermo King key benefits of the new sensor include: quick and easy installation on Thermo King Athenia™ CAN based units; seamless adaptation and not visible to passengers; active monitoring of the CO2 PPM levels inside the bus and management of fresh air supply by the Athenia unit; step-less drive of the fresh air flaps to provide smooth operation and optimised ventilation; and “optimised control and balance between energy conservation and ventilation”.
UPGRADING ON THE MOVE
If a bus is already equipped with the new sensor, upgraded Thermo King proprietary monitoring software can be uploaded and enable the new features.
AUTOCENTRAL AND BAIC MAKE SERVICE DEAL
WORKSHOPS
Al Masaood Group’s Abu Dhabibased multi-brand service and repair centre will now oversee general and mechanical repairs of Chinese firm BAIC’s passenger vehicles in the UAE.
BAIC is one of China’s largest automakers by volume and under the terms of their partnership, AutoCentral will cover repairs provided by auto body insurance coverage.
This new cooperation encompasses a range of services, including quick lube, periodic maintenance, tyre change and servicing, and battery replacement, said AutoCentral. Its team of experienced and qualified technicians will also extend brake and suspension repairs, engine repairs, electrical repair service, A/C maintenance and repair, troubleshooting and diagnostics, body and paint repairs, SMART repair, and value-added services.
INSIDE THIS MONTH’S WORKSHOP: HOW THE AFRICA AND MIDDLE EAST MARKET IS EVOLVING, PLUS THE FUTURE OF MOBILITY
DEFENDER TRIALLING FCEV TECH
ENGINES
Jaguar Land Rover is developing a prototype hydrogen fuel cell electric vehicle (FCEV) based on its New Land Rover Defender, with testing scheduled to begin this year. The FCEV concept is part of JLRs aim to achieve zero tailpipe emissions by 2036, and net zero carbon emissions across its supply chain, products and operations by 2039, in line with the Reimagine strategy announced last month.
FCEVs, which generate electricity from hydrogen to power an electric motor, are complimentary to battery electric vehicles (BEVs) on the journey to net zero vehicle emissions. Hydrogenpowered FCEVs provide high energy density and rapid refuelling, and minimal loss of range in low temperatures, making the technology ideal for larger, longer-range vehicles, or those operated in hot or cold environments.
Since 2018, the global number of FCEVs on the road has nearly doubled while hydrogen refuelling stations have increased by more than 20%. By 2030, forecasts predict hydrogen-powered FCEV deployment could top 10 million with 10,000 refuelling stations worldwide.
JLRs advanced engineering project, known as Project Zeus, is part funded by the government-backed Advanced Propulsion Centre, and will allow engineers to understand how a hydrogen powertrain can be optimised to deliver the performance and capability: from range to refuelling, and towing to offroad ability. The zero tailpipe emission prototype New Defender FCEV will begin testing towards the end of 2021 in the UK to verify key attributes such as off-road capability and fuel consumption. To deliver Project Zeus, JLR has teamed up with world class partners to research, develop and create the prototype FCEV.
BENTLEY TURNS TO CONTI FOR AMBITIOUS CHALLENGE
TYRES
Bentley has launched a major new sustainability initiative, with the announcement of a renewable fuels research and development programme spearheaded by the most extreme road-car-based Bentley in its 101 year history. The Continental GT3 Pikes Peak, designed and built to compete for the Time Attack 1 record at this year’s Pikes Peak International Hill Climb, will be the first competition Bentley to run on renewable fuel, ahead of a goal to offer sustainable fuels to Bentley’s customers around the world.
The modified Continental GT3 racer, based on Bentley’s race- and championship-winning car, will power its way through the 12.42-mile course running on a biofuel-based gasoline. Various blends of fuels are currently being tested and evaluated, with possible Greenhouse Gas (GHG) reductions of up to 85% over standard fossil fuel.
The company said in a statement: “Bentley’s ambitious and transformational Beyond100 programme will see the brand become the world’s leading sustainable luxury mobility company, with the entire Bentley model range offered with Hybrid variants by 2023 ahead of Bentley being BEV-only by 2030.”
To break the record, the car will have to complete the nearly 5,000 ft climb, which includes 156 corners, at an average speed of more than 78 mph to cross the finish line in less than nine minutes and 36 seconds. Bentley has once again turned to threetime Pikes Peak champion and former “King of the Mountain’ Rhys Millen (NZ) – who holds Bentley’s two existing Pikes Peak records.
TARGETING A HIGH SPEED RECORD
The GT3 racer will need to complete the 5,000 ft climb in under 9 minutes and 36 seconds.
TOTAL OPTS FOR OPEN BONNET
ENABLING ONLINE PURCHASES
Through Open Bonnet’s platform, customers will be able to choose Total Lubricants seamlessly from online purchase to booking a choice workshop.
LUBRICANTS
Total Marketing Middle East (TMME) has signed a Memorandum of Understanding (MoU) with Open Bonnet which will see it collaborate with the UAE-based aftermarket Online to Offline (O2O) cloudbased auto services and products platform company. Open Bonnet offers 360-degree services to car owners operating in the GCC and the firms explained that the MoU spans the entire digital value chain “whereby TMME and Open Bonnet shall seek opportunities to collaborate in the auto aftermarket segment”.
In a statement they added: “The two companies share the same vision: customer satisfaction as a priority. Together, they will achieve this by offering customers with transparency and an optimised digital journey.”
The Open Bonnet platform offers a marketplace that allows car owners to choose & connect with one of its 70+ verified workshop partners through an end-to-end digital experience. TOTAL is the preferred lubricant partner on Open Bonnet with a listing of more than 25 TOTAL authorized service centers. This partnership ensures quality, trust and convenience to end customers.
TMME managing director Karine Singh said: “We are delighted to be closer with our end-customers, while expanding our e-commerce presence. Through Open Bonnet’s platform, customers will be able to choose Total Lubricants seamlessly from online purchase to booking a choice workshop.”
Open Bonnet’s Gaurav Sharma believes technology is a powerful enabler to answer some of the age-old inefficiencies and pain points that exist in the auto after-sales experience.
“We have attempted to bring standardisation, transparency and convenience for car owners.”
