“We are keeping to our core business: managing large vehicle fleets”, says Tex Gunning, CEO of LeasePlan Corporation. “We’ve been doing that for 50 years, and very successfully too. And we are going to do it even better and be more competitively than before.”
Approached to see if he would be interested in running LeasePlan, Tex Gunning (1950, Dutch) went online to investigate both the company and what was happening in the industry, “and my wife looked at her computer and said, ‘wow, wow, this industry is just changing so dramatically’. And that made it very interesting,” he says. Since his appointment in September 2016, we had been chasing Tex Gunning for an interview. Eight months later he finally welcomes us into his office in Almere, the Netherlands.
The first clues to the transformation taking place at LeasePlan Corporation are already evident. For the first quarter of this year, the leasing and fleet management giant reported a 6% increase in its fleet size – LeasePlan manages 1.7 million vehicles in more than 30 countries; and a 5% rise in its underlying gross profit compared to the same period in 2016.
What were your first impressions of LeasePlan when you arrived in September last year?
Tex Gunning: “We saw a very good company, but one that was still stuck in a classic operating model; you start in one country, and you are a local company. Then you open in another country and you become a multi-local company; then you launch in another country and you are a multi-multi local company. LeasePlan has a history of being a multi-local organisation, with the great advantage that you are in very close proximity to your customers and you create an enormous entrepreneurial spirit country by country.
But there are limits to that model; you don’t always build best practices in all countries, because there’s no operating model where best practices are being discussed, and no leadership model where best practice is being leveraged in all countries. So, you end up with 32 IT systems, 32 ways of doing pricing, 32 ways of running a business.”
How do you plan to change this?
"My emphasis is to bring the company to its next stage of development as a fully integrated organisation that is even better able to deliver a service to our customers. And this under the new One LeasePlan umbrella. There is no other way but to create that integrated organisation via e.g. one SAP system, one way of purchasing, one set of processes, and create one fully integrated organisation."
What’s your timescale for this integration?
"We have started and within the next two to three years this will be finished."
You have decided not to open the LeasePlan Asia hub in Malaysia after all preparations, does this mean a scaling back of the company’s global ambitions?
"We have stopped expanding into Asia, not because we don’t want to be there, but because getting our house in order is our top priority. We need to improve our service and to become more cost competitive. LeasePlan has to focus firstly on Europe, home to most of our turnover and most of our customers. But we also follow our customers to the United States, Mexico, Brazil and India. The moment that these businesses get a certain scale and rhythm, we can say: okay, we can take a bit more risk here or a bit more risk there. We will return to Asia when we have done the work we have to do."
What operational changes have you made to serve international clients?
"International customers are an extremely important part of our portfolio. We have now fully integrated LeasePlan International into our European organisation, which is where our main international customers are. Under the old business model, our international customers had their own dedicated organisation, but lower down in organisation. We have now elevated it to the top of the organisation. Our COO Marco van Kalleveen’s team look after Europe, and I take the rest of the world, so I talk to all the international customers in the US, Mexico, Brazil and India. We have to give them the attention they deserve. The number of international customers will only grow, so we are creating far more dedicated teams, and Marco and myself will be far more engaged with international customers."
How is LeasePlan changing its product portfolio?
"The focus of the company has not changed: large customers with large fleets are our top priority. We believe the corporate market will continue to grow. It’s a service market and large fleet management is a core competence which is difficult to replicate. Why is the operational lease market interesting? That has to do with what we call the profit pool of a car, which is over the full life-cycle of a car. We own the car, and therefore we own the life-cycle of the car, and consequently we thus own the whole value chain of the car. I’m convinced that will continue to happen.
Let me put it like this: businesses should stay very close to their core. I know people love to talk about mobility, but there’s no sexy story here, we’re not going to offer scooters or bikes. We are fleet managers. We are staying where our core is and sticking with what we have been doing for 50 years. We are just going to do it even better and be more competitive."
Are you planning to play an active role in the larger fleet community?
"My priority is LeasePlan. As a CEO, you have to find the right balance between your role in the industry and your primary role, which in my case is running LeasePlan. So, I will be out in the industry and I’m certainly open to attend your Fleet Europe Summit in December, but let me be clear: it’s not my goal to attend all events or to be on the cover of every magazine. That might be nice for my mother in law, but not for LeasePlan."
Don’t miss the complete interview with Tex Gunning in the end of June magazine of Fleet Europe, with his vision on:
- Corporate Mobility
- Private Lease
- The partnership with Uber
- The consolidation in the fleet and lease industry
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