Analysis
11 Dec 18

Brands, awareness and private lease competition

Nobody in the general public has heard of ALD, Arval or LeasePlan as none of them is using much publicity for its corporate business. However, in the years to come they all plan to grow their portfolio on the emerging retail market where brand awareness matters.

Daily rental companies and OEM have strong brands

The daily rental business, which is predominantly a retail activity, owns strong brands. Hertz, Europcar, Avis, Sixt and others are strong brands that the public can easily identify. Manufacturers and their captives are even stronger brands and could certainly easily access the retail market to offer full-service leasing products.

Both categories, short term operators and OEMs, have a physical distribution network to access the retail market. Daily rental companies could likely sell private lease in their branches as a longer-term rental contract. At present they are moving from short to medium-term products and they might offer operating lease in the future. OEMs could obviously sell a three-year contract through their dealers as an alternative to a loan or finance lease through their financial captives. 

The interesting point, however, is that most manufacturers that are active on the corporate market do so using a specific brand like Alphabet for BMW, Athlon for Mercedes or Free2move for PSA/Opel. Their main reason is that they offer all possible cars on the market, just like independent lessors. They prioritise mobility services over their own brand which does not seems to be the case for Volkswagen or Renault.

Multi-brand lessors compensate using indirect sales channel

The general public would be surprised to know that the three market leaders (ALD, Arval and LeasePlan) own more than 5 million cars around the entire world. 

They have the perfect product to move towards private lease but will struggle to go direct as the market does not know them and they have no distribution network for retail. This is the likely reason why they have chosen to use indirect channels. All three plan to do business with employees of their existing corporate customers or will use banks or dealer networks in partnership to access customers they do not own.

This is an interesting competitive landscape where all majors have strengths and weaknesses. This is also a market where competitors partner and the winners might be the aggregators.

Image: Sixt rental car in Italy

Author: Pascal Serres, Global Fleet expert