Editor's choice
10 Nov 21

“Leasing rates will go up”

Yet another thing you can’t do in an online conference: get three leasing bigwigs together in the same room. Closing the conference segment of the Fleet Europe Summit 2021 in Brussels, Tim Albertsen (CEO, ALD Automotive), Alain Van Groenendael (CEO, Arval) and Marco Lessacher (CEO, Alphabet) sat elbow to elbow to discuss the main topics of the Fleet Europe Summit, and the challenges their industry will face in 2022. And to argue about “that bloody bus”.

Panel moderator Steven Schoefs opened by cheekily confronting the CEOs with a statistic from this year’s Global Fleet Survey: Germany, Denmark and Belgium – coincidentally the home countries of the respective executives – were the countries where most international fleet managers said they would consider changing lease partners. “Fortunately, more than half also said they weren’t considering a change”, said Schoefs, softening the blow.

Chip shortage

The panel went over the main themes that resonated throughout the Fleet Europe Conferences, offering some insight into top-level thinking about the issues that are affecting the leasing industry today and, more pertinently, tomorrow. The first one being the chip shortage, and its effects on delivery times. 

Marco Lessacher (pictured left): “Before, our customers had to wait 2 to 2,5 months between order and delivery of their company cars. Now the average is 7 months – and in some countries, you can’t even order any vehicles at all at the moment. Our advice to our customers: order early, accept that you perhaps can’t get all the options you wanted, look for flexible solutions via rental, and extend your lease contracts.”

Alain Van Groenendael: “Our average delivery time is 180 days, more than double the normal. And that’s a pity, because our orders have grown strongly – in the double digits, compared to 2019. Our advice is similar: anticipate orders a long time ahead, extend your contracts – not that much of a problem, since mileage is generally lower than normal – and be flexible.” 

Mr Van Groenendael also pointed out that the supply issues mean that lease prices are likely to go up, which Tim Albertsen confirmed: “OEMs are looking to clean up the market, which means higher prices. Some of that we will have to pass on to our clients, so leasing rates will go up. Which means that we will have to talk to our clients about adapting car policies.”

Post-covid fleet management

Lockdowns have led to a boom in working from home (WFH), which in turn has put into question the size of corporate fleets. Which therefore will become smaller. That is the accepted wisdom. But perhaps it won’t come to that, said Mr Van Groenendael: “Arval does an annual global survey of about 5,000 customers. Our previous one was conducted in the middle of the first lockdown. And yet, 45% said they thought their fleet size would increase. Only 8% expected their fleets to shrink. What we do see, though, is that the standard model of the company car is evolving, moving towards salary sacrifice, mobility budgets, shared vehicles. But not so much. A more important trend: companies asking us to provide mobility solutions for all their employees. I’m optimistic that the growth of the latter phenomenon will more than compensate any losses in the former one.”

ALD recently acquired German vehicle subscription specialist Fleetpool. “We see flexible solutions like this as complementary to our offer. We’ll be integrating Fleetpool with our own ALD Flex, and rolling it out in several markets. There is a real need out there for flexible solutions, and they will be an integral part of our offer.”

Congratulating ALD on their acquisition of Fleetpool, Mr Lessacher pointed out that Alphabet too has its own flexible solution: “AlphaRental is present in 10 markets, with a total of 10,000 vehicles. Flexible solutions are definitely something we will focus on in 2022, and beyond.”

Electrification

“This year has been amazin in terms of EV uptake. In the first six months of the year, we were at 26% electric vehicles of our total orders, both BEVs and PHEVs. That’s double the European average”, said Mr Albertsen. “Our Move2025 calls for 30% by 2025, so it seems like we’ll be able to adjust that target upward soon.”

“We’ll also do more than our plan for 2025”, chimed in Mr Van Groenendael. “We’re at 30%, of which 10% BEVs and 20% PHEVs. Half a year ago, we made a commitment to our clients that we would plant a tree for every EV that they ordered. We’ve planted 70,000 trees so far.”

“Alphabet’s intake for 2021 so far is at 25%, of which about one third BEVs”, said Mr Lessacher.

COP26

Considering the bright minds that are trying to save the world by committee in Glasgow right now, what can Europe’s leasing giants bring to the table in the fight against climate change?

Mr Albertsen: “We’re committed to lowering the CO2 emissions of our customers’ fleets by 40% by 2025. Again, it looks like we’ll hit that target before time, and that we’ll be able to increase it. One of the ways we’ll do this is by our investment in (MaaS startup) Skipr, which will give our customers options to move around in a multimodal way.”

Mr Van Groenendael: “We try to reduce our own CO2 emissions year on year, and to compensate for the amount we still emit. And we consult with our customers to help them reduce their emissions. Arval has received a platinum rating from Ecovadis, which is a recognition of the seriousness of our efforts in emissions reduction.”

Mr Lessacher: “We are taking on board carbon emissions experts, but we’re also consulting with our customers. They learn from us, but we also learn from them. I really have to congratulate some of our customers for the results they are achieving. They are passionate about this, and we are happy to take on board what they can teach us.”

Digital revolution

Mr Albertsen (pictured left): “We’ve invested a lot in digitalisation, and it’s a win-win. We generate better customer journeys, and we get much more data, which helps us gain more efficiency. But we also see that we’re not digital natives. Running an e-business is a very different thing. So we’re upscaling our staff and attracting new talent.”

Connected and telematics

Mr Van Groenendael: “Our Survey found that 81% of companies are using telematics or will do so in the next two years. We see clear benefits: better driver safety, lower fuel cost, lower CO2, improved CSR.”

Autonomy

Mr Lessacher: “Autonomous is not the hot topic for us that others may think it is. I don’t see the added value.”

Mr Albertsen: “In the short term, full autonomy will not happen. Definitely not in five years, maybe not even in 10 years. It will eventually happen, but I’ll probably be retired by then. What I do see happening earlier, is flying cars. That’s an easier proposition, and some of our customers are interested. And our policy is: if it can move, we can lease it.”

Mr Van Groenendael (pictured right): “We are experimenting with an autonomous bus taking our employees from the train station to our HQ and back. It’s a very interesting pilot.” 

Mr Albertsen: “We actually live in Paris close to the Arval HQ, and we are always seeing that bloody bus crawl past at 5 km/h, making frequent stops.”

Mr Van Groenendael: “We’ve increased the speed, Tim. It’s now running at 15 km/h!”
 

Images: Benjamin Brolet

Top Picture - left to right: Moderator Steven Schoefs, Tim Albertsen (ALD), Alain Van Groenendael (Arval), Marco Lessacher (Alphabet)

Authored by: Frank Jacobs