17 minute read
The geographic scope and strategy of international leasing companies
GROWING A LEASING COMPANY
Yves Helven
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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.
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?
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 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
century to 2020, was very much about growth through acquisition and gaining competitive market share. Those who have been in the industry for a long time will remember how many leasing providers they could choose from 30 years ago when sourcing for company cars. Small and mid-size local players with operations of 20, 30 people and a total fleet size of less than 10,000 vehicles were common and could be fairly good.
Gradually, mergers and acquisitions redesigned the landscape, providers became bigger and more professional. The trend of regional providers started, and the job of the fleet manager transitioned from a local scope to an international scope. The regional providers became European providers, much to the liking of European fleet managers and their procurement counterparts, who loved the idea of reducing the number of suppliers and improve pricing through volume.
GEOGRAPHIC EXPANSION (IN ALPHABETICAL ORDER)
ALD has opted for the joint Arval is consolidating its global venture model to expand in the footprint through the alliance with Nordics and works with Nordea North American leasing group Finance. The JV allows ALD to Element. Focus of the partnership address the needs of international is on Latin America, with clients in the northern regions, operations in Colombia, Brazil, but at the same time to expand to Peru and Chile. SME clients, a specialty of Nordea. The JV model was also applied to Leasys, with its 300,000 vehicles, Asia, where ALD will be offering services in Malaysia and Japan might be a (relatively) smaller player in the leasing ecosystem, first. but their ambition reaches well beyond the 8 countries in which Alphabet has decided to expand they are offering services; their through partnerships with strong goal is to add another 5 countries local players, such as UNIDAS in and grow their fleet size by 50% Brazil and Auto Plan in Norway. within 2 years.
Athlon operates in 11 European countries with proprietary offices but is present in more than 20 markets with partners. Recently, Athlon re-entered the Turkish market through a partnership with local hero Hedef Filo.
LeasePlan: the company is present in 32 countries globally with a big focus on Europe. In each country LeasePlan operates under the LeasePlan brand without an alliance partner.
Fast forward to 2020. All the usual suspects in the leasing supply chain
are global and they are massive — a handful of players have exceeded the 1 million vehicle threshold and are present across multiple continents. Some of them are still scouting emerging markets, optimising what potential is left of geographical expansion, others are turning to other growth strategies to please the shareholder.
Mobility
In the 2019 Global Fleet Manager Survey, when asked “From which supplier do you expect corporate mobility solutions?” fleet managers across the world said that they expect their leasing provider to take the lead. Admittedly, most of the providers have ventured into the mobility arena, but they can hardly be said to take a prominent, leading role today. Nevertheless, mobility and digitisation are high up the strategic agenda. Once again, the client is now actively asking for it.
Digitisation
Next to growth-oriented strategies, leasing companies can also increase returns by optimising their opera
tions. Traditionally, the fleet and leasing business is FTE-heavy, operating at a rather high car-to-employee ratio. Using new technologies to increase the number of cars per FTE contributes directly to the baseline and, eventually, adds to the dividends.
LeasePlan puts its NextGen Digital Strategy forward to achieve this goal. Their objective is to become the world’s first fully digital car-asa-service provider. CarNext.com is one example of how digital transformation can activate new platform profit centres for the lease industry. LeasePlan does not exclude partnerships in their new digital model.
Diversification
Leasing companies have done well in the last few years and revenues have been growing steadily. This clearly does not come from one single strategy, especially as the pressure on residual values is increasing constantly. It’s clear that, moving forward, leasing providers will have a much more diversified product and service offering, whilst closely monitoring and conquering new markets and new types of clients.
WHO’S LEADING IN LEASING?
Céline Gilson, Frank Jacobs, Steven Schoefs
ALD, Arval, Alphabet, Athlon and LeasePlan: all different, but sharing one trait. These are the Big Five. Together, they control more than half of Europe’s vehicle leasing market. To the voices of their top executives, add those of three essential challengers, and you get a pretty good picture of the outlook and strategies of the continent’s major lease players.
CEO
Tim Albertsen (since March 2020)
Shareholder:
Société Générale (80%; the remainder is listed on Euronext)
Global presence:
2.235 million vehicles
% International business:
>500 international clients, >400,000 vehicles, >20% of the overall fleet
% LCVs in total fleet:
not disclosed
PORTUGAL 23.697 IRELAND 9.242
SPAIN 119.517 NORWAY 17.325 SWEDEN 31.246
DENMARK 25.180 FINLAND 22.691
ESTONIA 1.601
LATVIA 1.894
LITHUANIA 2.544 RUSSIA 22.542
UNITED KINGDOM 157.457 NETHERLANDS 75.226 GERMANY POLAND 14.136 BELGIUM 185.974
LUXEMBURG 81.479 14.680 CZECH REPUBLIC
SLOVAKIA 26.793 5.489 FRANCE 553.237 SWITZERLAND 5.268
AUSTRIA SLOVENIA 8.339 HUNGARY 15.576 ITALY 194.870 2.381 CROATIA 7.562 SERBIA 3.946 UKRAINE 4.879
ROMANIA 11.280
BULGARIA 4.047
GREECE 4.666 TURKEY 12.448
Tim Albertsen,
CEO, ALD
“We’ll continue to adapt our traditional full-service leasing offer to support new mobility capabilities, such as digital platforms, connected cars, MaaS, e-mobility, flexible offers and multi-modality. We believe this will generate significant growth in the coming years and position us to be a leader in mobility.”
“As vehicle ownership and usage continue to diverge, we see higher demand for outsourced mobility. This is particularly true in the retail market,
Algeria
Argentina
Australia
Brazil
4.087
950
55.000
32.939
Canada
Chile
China
Colombia
OUTSIDE EUROPE
14.000
4.045
2.384
2.141
Costa Rica, Guatemala, Honduras, Nicaragua, El Salvador, Puerto Rico,
Panama
5.100
India
Mexico
Morocco
New Zealand
14.872
24.025
10.823
25.000
Peru
South-Africa
USA
2.237
36.000
334.000
where we’ve seen our private lease fleet increase by 30-40% each year to 153,000 vehicles at the end of 2019, surpassing our three-year target. Private lease now represents 8.6% of our total fleet and we expect it to remain a key growth driver, supported by a state-of-the-art, end-toend digital retail solution.”
“Whether carsharing or ridehailing, at the heart of new mobility systems is always a vehicle fleet. We believe our existing competencies in running fleets efficiently, our scale and our coverage mean we’re well-positioned to provide these services in the future.”
“For some years now, we at ALD have been building new capabilities in the form of platforms, services and products that allow us to build strength in these new areas. So in any future projection of the industry, we see ourselves playing a central role as the engine powering the mobility products and services that our partners – and we – want to offer.”
CEO
Alain Van Groenendael (since January 2019)
Shareholder:
BNP Paribas (100%)
Global presence:
• Arval global leased fleet (end Dec. 2019): 1.298 million vehicles • Element-Arval Global Alliance: more than 3 million vehicles
% International business:
>200 international clients, >7% of overall portfolio, increasingly within the Element-Arval Global Alliance
% LCVs in total fleet:
around 20% and rising
NORWAY
SWEDEN FINLAND
RUSSIA
IRELAND
SPAIN DENMARK
UNITED KINGDOM NETHERLANDS POLAND
BELGIUM GERMANY
LUXEMBURG CZECH REPUBLIC
SLOVAKIA
FRANCE
SWITZERLAND AUSTRIA
HUNGARY
ITALY
SERBIA ROMANIA
GREECE
Alain Van Groenendael,
Chairman and CEO, Arval
“Our first objective is to deal with the current challenge of Covid-19 by accompanying our customers in this post-lockdown phase with our new multimodal offer “The Journey Goes On”. Besides, we will of course prep for Arval Beyond, our new strategic plan, which will be deployed progressively across our geographies. Full-service lease and mid-term rental, both for professional and private customers, will remain our core business.”
“But we also aim to offer more holistic mobility solutions for the employees of our corporate clients and invest further
Argentina* Australia* Botswana* Brazil Canada*
Chile China* Colombia
OUTSIDE EUROPE
Ecuador* Eswatini*
Ghana* India Japan* Lesotho* Mexico* Morocco
Mozambique*
Namibia* New Zealand*
Peru South Africa*
Thailand* United States* Zambia*
*Under the Element-Arval Global Alliance
in flexible offers and add-on services based on the connectivity of our vehicles. Plus, we remain committed to growing our share of EVs at twice the pace of the market.”
“According to our 2019 Arval Mobility Observatory Fleet Barometer, we can expect the rising trend in operational leasing to continue, with 26% of companies stating that they intend to develop this financing method in the near future –three percentage points up over the 2018 result. This intent is strongest in France (44%), Germany (42%) and Belgium (37%).”
“We aim to stay ahead by being a mobility integrator, offering our customers flexible solutions and seamless experiences, every day and in a responsible way. Our new tagline – ‘For the many journeys in life’ – reflects this new business model. We acknowledge that multiple mobility options are possible. And we open our brand to other options than car leasing: not just carsharing, bikesharing and ridesharing, but also autonomous shuttles, for example.”
CEO
Marco Lessacher (since July 2019)
Shareholder:
BMW Group (100%)
Global presence:
717.000
% International business:
app. 100 international clients
% LCVs in total fleet:
15%, set to increase
PORTUGAL NORWAY
SWEDEN
RUSSIA
IRELAND
SPAIN DENMARK
UNITED KINGDOM NETHERLANDS
BELGIUM GERMANY POLAND
FRANCE LUXEMBURG
SWITZERLAND CZECH REPUBLIC SLOVAKIA
AUSTRIA
HUNGARY
ITALY CROATIA
SERBIA ROMANIA
BULGARIA
GREECE TURKEY
Marco Lessacher,
CEO, Alphabet
“Firstly, we’re focusing on our existing innovations, all of which will become even more relevant in the coming months – i.e. AlphaElectric and AlphaCity, which offer state-ofthe-art car solutions; and AlphaFlex, our mobility budget. Additionally, our AlphaGuide app will add new functionalities. Secondly, we’ll focus on products like AlphaRent, providing more flexible and sustainable mobility.”
“The what stays the same, because there will always be a need for vehicle
OUTSIDE EUROPE
Australia Brazil China
leasing and fleet management. It’s the how that will change. Our own Europewide survey in 2019 showed that the younger generation needs flexible mobility and is increasingly willing to lease. So there’s a big potential for new, emerging products – taking into account the differences between markets.”
“Lease companies are changing from fleet suppliers to mobility providers, just like fleet managers are becoming mobility managers. Now, tech giants and start-ups are entering our competitive space – and mobility providers are starting to collaborate with them. So it’s important to stay agile and closely monitor the increasing complexity of customer journeys – which involve data collection, bundling of services and standardisation of customer communication. AlphaFlex is a mobility budget that offers corporate carsharing, rental and taxi services, ridesharing and public transport as add-ons to traditional corporate fleet product. And on-demand mobility is also getting added to the mix.”
CEO
Gero Goetzenberger (since December 2016)
Shareholder:
Daimler AG, operated by Daimler Mobility AG (100%)
Global presence:
405, 500 vehicles
% International business:
“increasing”
% LCVs in total fleet:
around 20% and rising
PORTUGAL 2.000 SWEDEN 2.500 RUSSIA
IRELAND
SPAIN 17.000 UNITED KINGDOM 15.500 NETHERLANDS POLAND 115.000 GERMANY 10.500 BELGIUM 90.000 55.000
LUXEMBURG 2.000 CZECH REPUBLIC SLOVAKIA
FRANCE 75.000 SWITZERLAND 1.000 ITALY 20.000 AUSTRIA
HUNGARY
ROMANIA
TURKEY
Gero Goetzenberger,
CEO, Athlon
“Our key objective for 2020 is to support our customers in manoeuvring through the current corona crisis. With our remaining capacities, we continue to drive our digitisation agenda. Additionally, we’re preparing further development of the product portfolio to more flexible offerings.”
“We’ll have to see which impact the current pandemic has on the fleet business. In general, it should accelerate the trend towards more usage, and more flexible solutions. Additionally,
OUTSIDE EUROPE
USA (through a network partner: Donlen)
The numbers indicated represent only the vehicles in Athlon’s own portfolio; where Athlon works with a local partner, the country is mentioned, but without numbers.
customers are getting more used to online activities, further driving the demand for more digital offerings. Also, the outsourcing of fleet management helps our customers focus on their core business, which is essential – especially in times of crisis.”
The trend from ownership to usage is transforming the automotive industry and creating new opportunities for Athlon. We are investing in new solutions, specifically new rental and subscription business models, which will offer more flexibility to our customers. This comes with an improved, digital customer journey. Obviously, this also requires increased digitisation of our processes.”
“In addition, we’re working closely with Mercedes-Benz on transforming online connectivity into both new products and cost savings for our customers. We’re also helping to reduce fleet emissions by focusing on alternatives to combustion engines. We continuously broaden our know-how so we can advise our customers on how to integrate EVs into their fleets.”
CEO
Tex Gunning (since September 2016)
Shareholder:
LP Group BV, an international consortium of institutional investors (100%)
Global presence:
not disclosed
% International business:
not disclosed
% LCVs in total fleet:
22%
PORTUGAL NORWAY
SWEDEN FINLAND
RUSSIA
IRELAND
SPAIN DENMARK
UNITED KINGDOM NETHERLANDS
BELGIUM GERMANY POLAND
FRANCE LUXEMBURG
SWITZERLAND CZECH REPUBLIC SLOVAKIA
AUSTRIA HUNGARY
ITALY ROMANIA
GREECE TURKEY
Tex Gunning,
CEO, LeasePlan
“We have the ambition to be the world’s first fully-digital Car-as-a-Service (CaaS) company, and in 2020 we’ll continue implementing our NextGen Digital LeasePlan strategy to accelerate growth and become a digital service integrator. Also this year, we’ll continue to lead in the transition to electric and other alternative powertrains, towards our goal of achieving net-zero tailpipe emissions by 2030.”
OUTSIDE EUROPE
Australia Brazil India Malaysia
Mexico New Zealand
USA
“The long-term trend from ownership to usership continues to drive leasing. Although we find ourselves in unprecedented times due to the COVID19 health crisis and the disruption it causes, leasing remains a cost-effective and prudent option for many clients. This is especially true given that leasing does not require large upfront capital outlays from customers. For this reason, and despite recent developments, we continue to see significant growth opportunities in the CaaS market.”
“Digital tech is transforming the CaaS industry, enabling incumbents to improve service while lowering cost – as well as encouraging the development of new platform businesses based on existing CaaS competencies. Take CarNext.com, for example.”
“Through our NextGen Digital strategy, LeasePlan is transforming from an analogue into a fully digitally-enabled business, delivering digital services at cost. This will help us capture growth opportunities in the SME, Private and Mobility Provider markets.”
CCO
Hans Kolff, Director of International Sales (since April 2018)
Shareholder:
Autobinck Group (100%)
Global presence:
32,300 vehicles. Active in the CEE region (Czech Republic, Hungary, Poland, Romania, Slovakia)
International business:
more than 30%
CCO
Jochen Schmitz, Head of International Fleet (since November 2016)
Shareholder:
Volkswagen Group (100%)
Global presence:
Subsidiaries in all continents
International business:
145,000 multinational contracts in portfolio at the end of 2019 (+20% year-on-year)
“Our goal is to develop offers our clients can seamlessly integrate into their services portfolio with minimal disruption, such as private lease for employees, full operational lease of a used car, mobility budgets and carsharing platforms for an existing carpool.”
“We’re active in Central Europe, which has a huge potential for further growth. We’ll continue to deliver a high level of service, combined with innovative products. So, we can both meet the rising demand for vehicle leasing and fleet management, and explore opportunities in mobility.”
“Our aim is to be the world’s largest fleet provider, with a total portfolio of 30 million contracts by 2025. Our first focus markets for international fleet growth are the UK, Spain, France, Italy, the Netherlands and Belgium. Key element is closer integration with VW Group brands.”
“Vehicle leasing will remain an important and essential pillar of corporate mobility in 2020.”
Federico Sanguinetti, Head of Sales, European Markets (since July 2018)
Shareholder:
FCA Bank S.p.A. (100%); FCA Bank is a joint venture between FCA Italy S.p.A. and Crédit Agricole Consumer France
Global presence:
The Big Five (DE, FR, UK, SP, IT), Belgium, Netherlands and Poland; and by the end of 2020, also Denmark and Portugal
International business:
not disclosed
CCO
“Thanks to our presence in eight European countries, we’re among the top mobility players of the continent. We aim to reach 13 markets in the next two years, growing from 300,000 to 450,000 vehicles, which will put us in the top four of the major rental players in Europe.”
“Certainly, the fight against COVID-19 will have an impact. But we foresee even more vehicle sharing, and even less ownership.”
“Increasingly supplementing vehicle leasing and fleet management will be new, more flexible solutions. One solution does not exclude the other. What is important is that providers can manage various mobility solutions form a single source.”
“We’re digital – and innovation-oriented, so we’ll keep using technology to make our services more accessible and more in tune with customer needs – following trends such as digitalisation, dis-ownership and the subscription economy.”
