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Interview with new Alphabet : "We are aiming for top 3 in European leasing market"
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On 30 September 2011, Alphabet International completed the acquisition of ING Car Lease. As a result of the deal, the new company now has more than 460,000 cars under management and operates in a total of 18 countries. The company has also expanded to become one of the five largest fleet management companies on the European market. One of Alphabet's key strategies will be to offer flexible mobility solutions, say co-CEOs Norbert van den Eijnden and Ed Frederiks.
Ed Frederiks: "The discussions about the takeover actually went quite smoothly, particularly with regards to the intentions. It's an intense process and takes much more time than the first round of discussions. The two companies complement each other very well, so the takeover was seen as a perfect fit between both ING Car Lease and Alphabet."
Norbert van den Eijnden: "Let me point out that economic developments were one of the basic reasons for the takeover. We noticed that banks are no longer the most logical owners of a car leasing company. We believe firmly that several banks are ready to step out of this business, and that was one reason why we initiated contacts with the idea of a takeover."
So you believe that a bank is no longer the ideal shareholder of a modern leasing company?
Norbert van den Eijnden: "Precisely. I, personally, think that banks will be getting out of this particular line of business. At least there is a very good chance of it. But leasing is capital intense, so finding a buyer is not easy. Many investment companies and manufacturers cannot permit themselves to do this. So in the end, we find ourselves in a unique situation where we can really speak of a core activity, otherwise the realisation of such a deal would not be possible."
Ed Frederiks: "We are convinced that a period of consolidation is about to begin, because financial institutions will have to concentrate more on their core business, while the market itself will evolve with increasing speed towards new ideas and concepts. All of this fits in perfectly with the structure of the new Alphabet, and it is something for which others will not be prepared."
Norbert van den Eijnden: "Economies of scale will become immensely important. On the other hand there is the refinancing. For the second time in a relatively short period, some are finding out that refinancing is extremely expensive, or will become too expensive. This is another reason why some companies will be turning their backs on the market. Our hypothesis is that there will be four large international leasing players as of 2020. They will control more than 50 percent of the European market. This is already happening in the short-term hire segment; Europcar, Avis, Sixt and Hertz have a combined market share of more than 70% in most European countries. Of course there are some local parties, but the big game is being played by a declining number of parties."
Why is ING Car Lease an interesting party for Alphabet, and why is Alphabet the ideal owner of ING Car Lease?
Norbert van den Eijnden: "Ed Frederiks mentioned that the two companies are complementary both in terms of market penetration and customer segmentation. Alphabet has a strong presence in Germany, but ING is absent. Conversely, ING is strong in Belgium and the Netherlands, not, however, Alphabet. In other countries, such as the UK, the companies did not have a sufficiently strong position on their own, but together they have a solid impact. That means we are very complimentary. ING, on the other hand, is a known multibrand leasing company just like Alphabet, though we are frequently seen as a subsidiary of BMW. This marriage gives us the opportunity of expanding the company's multibrand ambitions."
Ed Frederiks: "It really is an excellent match. A company must have a certain size in this economic context, in which the scale of markets is increasingly important. Separately, we were medium-sized companies, which meant that we could not realise our ambitions. Our new size means that this is perfectly possible, and we will do it.”
The new Alphabet will be present in 18 countries, up from 16 countries. The merger has not produced exponential growth with regard to new markets. What is your strategy with regard to new markets?
Norbert van den Eijnden: "Our strategy is to provide excellent service to the top eight European countries. It's here that 80% of all leasing business is done. The next step will be to enlarge our footprint and reinforce our positions in countries where we don't have such a presence."
What happened with Alphabet Mexico?
Norbert van den Eijnden:"The product that we offered there, that is, full-service leasing, is a typical European product. When the financial crisis broke out in 2008, we decided to stop the activities in Mexico because the returns did not make it worthwhile."
How will the integration proceed?
Norbert van den Eijnden: "Different countries, different requirements, different speeds. In the Netherlands we have a large and a small player, so we expect integration to proceed quickly from a technical point of view. In countries where the two companies each have a portfolio of a similar size, the situation is naturally more complex. We are keeping up the pace to achieve rapid integration."
Ed Frederiks: "Our customers are our number one concern. For this reason, none of the account management teams have been changed. They are excellent anyway, but it is important that every customer continue to receive the same service from the same contact person."
The new Alphabet is aiming for a pioneering role in the area of mobility. What does this mean?
Ed Frederiks: "People's identification with a possessing a vehicle actually erodes in the long term. This means that you elaborate a different model of car use. Car sharing, carpooling and a combination of various transport modes are becoming more interesting to many drivers these days. We believe that we can play an important role in providing adapted mobility, and we can do it in line with the plans of our stakeholders. We are not only talking about things like e-mobility, but also about service and financing.”
Norbert van den Eijnden: "We want to make flexible use of cars and mobility concepts possible. With the introduction of electrical vehicles, such flexibility will become a must. So right now, we are busy developing software and other IT and telecom applications that will enable our customers to use their fleets quite differently than before.”
What is the medium-term ambition, say by 2014?
Ed Frederiks: "Let me put it simply: We are aiming for the top five in Europe within two years, and the way to achieve that goal will be through excellent coverage and service. Leasing is our great strength, and customers, partners, employees and potential customers as well will be taking notice. The competition, too, since we will be benchmarking the industry. Our goal after that is to be in the top three."
On the picture (from left to right): The New Alphabet's co-CEOs Ed Frederiks and Norbert van den Eijnden.
| 22/12/2011 | Steven Schoefs
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