FINANCIAL MODELS
GROWING A LEASING COMPANY Yves Helven
It will be fascinating to watch how fast and how seriously vehicle leasing companies are going to make the switch from an asset driven car-centric business model to a model that is built on flexible usage of smart mobility services.
FLEET EUROPE #117
After several decades of relatively safe and predictable growth, leasing providers have entered an era that requires a more diverse strategy to keep the shareholders satisfied. The nature of the investor has always been a determining factor for the type of growth the leasing company is aiming for: OEM-owned providers will support the growth of the brand, bank-owned businesses typically are a bit more risk-averse and adopt expansion strategies that hedge potential losses. As we are entering the realm of the digital circular economy, away from the produce-use-dispose cycle, leasing companies need to adapt. Mobility is not an isolated trend, it is rather the automotive translation of what is defining 21st-century business models: digital, on-demand, transaction-based. The question is how the leasing industry is transitioning to the new model?
“We go where the client wants us to go” Leasing companies can grow in different directions. The more traditional
ways are geographical expansion, acquisition, optimising operations and gaining competitive market share. Inventing new products or services (mobility) and addressing the needs of a new type of customer (SME or consumer) are more creative growth strategies. Obviously, the leasing supply chain combines the creative with the traditional, always in function of the customer profile. Big businesses are no disruptors and will typically not aim to dramatically change the behaviour of their clients. It is unlikely for a leasing
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company to offer mobility services in a traditional market, but they will jump on the mobility bandwagon if and when there’s sufficient demand from the customer base. Similarly, leasing companies will expand to new (emerging) markets only when client demand is secured and the risks related to the entry into a new country are mitigated. Again: “We’ll go where the client wants us.”
Global and massive The evolution of the leasing supply chain from, say, the 80s of the last
