The Car Leasing year 2015 in review
The past year was like no other in leasing history. The industry's deck of cards has been thoroughly reshuffled. These were the highlights of an eventful year:
→ The summer saw GE's fleet business in Europe sold to Arval, catapulting it to first place on the European market. The U.S. counterpart of GE's business was acquired by Element Financial Corp, which is also taking on board PHH. As a result, the Element-Arval Alliance will manage well over 3 million vehicles, have a presence in over 40 countries, with preferred partnerships in 14 further markets.
→ No holidays for our journalists this summer: only a few days after the GE deal went public, Volkswagen announced that it would sell its shares in LeasePlan to a consortium of pension funds and institutional investors. Why sell LeasePlan? The fundamental answer is that the Volkswagen Group is determined to be one-stop shop – also for fleets. So we can expect a much higher profile for Volkswagen Financial Services in the leasing industry.
→ Those were two biggest deals of the year, but that doesn't mean the other players kept quiet. Quite the contrary. ALD Automotive continued steadily with its geographic expansion, with an acquisition in the Netherlands, an alliance in Africa with Absa Vehicle Management Solutions and a new subsidiaries in Chile and Kazakhstan.
→ Athlon's expansion drive seems to be a bit less pronounced, but their alliances put them in a strong position in Europe, as well as in the U.S., Turkey and other key markets.
→ “It's not important to who is the biggest player”, said the leasing industry's leading CEOs at the Fleet Europe Forum in Rome, mid-November. To be followed a few days later by LeasePlan's proud announcement that it had reached the milestone of 1.5 million vehicles under contract worldwide. After which Arval announced a new alliance in South America, with Relsa. Alphabet is also expanding, opening a subsidiary in Australia. Clearly, whatever the bosses say, size does matter!
→ It's been an iffy year for the so-called emerging markets, many of whom saw their economies stall, Russia being an exceptional, but terrifying outlier. While the emerging markets mostly underperformed vis a vis their growth projections, the mature markets of North America and Europe did surprisingly well. Confidence has returned to the more mature markets, in a big way.
→ But everybody's eyes are still turned towards Asia, and especially China, as the region of most promise for the future. The long-term opportunities seem extraordinary. On the flipside: these are not easy markets. And indeed: the real breakthrough for the leasing industry in China has oft been predicted, but has as yet not materialised. Asia is more than China, however; the global players are also interested in and active on the promising fleet markets of India, Taiwan, Japan, the Philippines, Indonesia, Malaysia, Singapore, Vietnam and Thailand.
Change is coming
Everybody in the industry is aware that big changes are coming. Disruption is on the horizon. In a way, the fleet management companies are yesterday's disruptors. They have gained so much in self-confidence and market savvy that by now they're increasingly seen as 'classic' players on the fleet market. ARI is open about its great ambitions for the European market, and Fleet Logistics has become a permanent and trusted part of the market landscape.
How long will this state of affairs last? The new disruptors will most likely come from the so-called new economy, rich in technology, ready to introduce totally new business models. They're getting ready on the sidelines, causing considerable nervousness. What exactly are their plans? How are they going to roll out their new businesses? Who will be the final decision makers? Those are as yet unanswered questions. What does seem certain, is that the business models of future will be more collaborative – in the fleet industry and in the wider business world.
Naturally, leasing companies (and OEMs) want to ride the tiger rather than be eaten by it: they want to adopt the disruptive mentality and adapt it so they can integrate it into their offerings – whether as part of the traditional service supply format, or in the wholly different context of a new business entity.
Put differently, the fleet industry nowadays resembles a laboratory, with everybody exerimenting with new and different ways of offering moblity services. Nobody yet knows which particular formulas will be the successes of tomorrow.
Meanwhile, we see complementary formulas coming onto the market. Long-term leasing is now available for a shorter period, blurring the lines between lessors and rental companies.
Leasing companies are only too happy to offer their information technology and know-how to OEMs, and to serve as a white label for the various car brands. And then there's private lease, another potentially very promising path to generating more turnover and creating better profitability.
Biggest and best
We're talking here about services that offer just that little bit extra – small but crucially better offers with respect to connectivity, big data, global reporting, driver management and communication, helping customers to influence and obtain the loyalty of their employees, to innovate the services provided via mobile apps – and yes, ultimately, to grow and be the biggest as well as best...
How to innovate best, how to implement the right mobility-based business model fastest: this will be where the race of the future is won.