7 Feb 19

Private lease buoys ALD’s record 10% fleet growth

ALD Automotive today posted a record 10.1% fleet growth for 2018. At the end of last year, ALD managed 1.66 million vehicles worldwide. Partnerships and private lease were important growth drivers – and will continue to be so in 2019. ALD also leads the way in the energy transition from diesel to electric. 

Fleet growth was strong across all of ALD’s markets, with robust increases in Western Europe (+10%), Northern Europe (+9.4%) and Central/Eastern Europe (+6.9%). 

Dynamic growth
Particularly dynamic fleet growth was noted in the South America, Africa & Asia market (+17.4%). 

ALD’s gross operating income was up 0.8% to €1.34 billion, thanks especially to strong growth in leasing contract margins (+8.6% to €624 million) and services margins (+4% to €617 million). 

The number of used cars sold by ALD in 2018 was 238,000, up 9.4% over 2017 and thus roughly in line with fleet growth. As in the previous year, the proportion of cars sold via electronic platforms was well in excess of 60%.

Challenging market
For CEO Mike Masterson (pictured), record fleet growth confirms both ALD’s market leadership and quality of service: “In the face of headwinds from a challenging used-car market for diesel vehicles, we managed to record financial results close to 2017’s record.” 

“ALD’s focus on leading the transformation from diesel to electric and hybrid powertrains has significantly rebalanced our powertrain mix over the last 12 months. At the same time, we’re making good progress in developing used-car leasing.”

Partnerships and private lease

Fleet sales via partnerships – an ALD forte – increased by 15.9%, while direct sales increased by 7.3%. 

  • Earlier this week, ALD signed a partnership with energy company E.ON, focusing on the development of EV mobility solutions for corporates, municipalities and private customers in Europe.
  • At the end of 2018, private lease represented 6.7% of ALD’s total fleet (i.e. more than 112,000 vehicles), a 45% increase over the previous year’s end. Two-thirds of that growth came from partnerships. Private-lease target for end 2019: 150,000 vehicles.  

Electric and hybrid

ALD is actively moving away from diesel and – where appropriate – encourages clients to opt for electric and hybrid vehicles. The results are remarkable. 

  • For the full year 2017, diesel represented 67% of all ALD vehicles delivered to customers (64% in Q4 2017). For 2018, the full-year figure dropped to 58% (53% in Q4).
  • Less than 5% of ALD’s funded fleet is still powered by Euro 5 diesels, which will all be coming off lease this year. “Diesels with Euro 6 perform exceptionally well when it comes to emissions of NOx and CO2 – and in TCO,” Mr Masterson adds. Nevertheless, the shift away from diesel is expected to continue, with the share of deliveries expected to fall below 50% by the end of this year. 
  • Simultaneously, the penetration of electric and hybrid vehicles continued to increase, from 9% of all deliveries in 2017 to 15% in 2018. At the end of 2018, they represented more than 100,000 vehicles, up by almost 50% compared to just a year earlier. “The relative shortage of electric and hybrid product – with waiting times of 12 months and more for some models – is creating a bit of a lag,” says Mr Masterson.

2019 and beyond

For 2019, ALD expects organic fleet growth between 5 to 7%, plus bolt-on acquisitions as opportunities arise.

“Our growth prediction remains robust, but is conservative,” says Mr Masterson. “Even if our business is countercyclical to an extent, it makes sense to be prudent, considering the uncertainty surrounding Brexit, the Italian economy and a number of profit warnings in the automotive sector.”

Definitely set for good results is ALD’s second-lease segment: “We’re starting from a relatively small base, so rapid growth is to be expected. It’s relatively new for us, but we’re optimistic. Second-lease allows us to extend the depreciation of a vehicle over a longer period, which is positive. We’ll provide more insight as the year progresses.”

Via its Customer Advisory Board, ALD is getting a sense of the increasing number of questions and the rising awareness around EVs. “That goes for both new and used EVs: the latter are performing very well, and considering the relatively small supply will be very sought after,” Mr Masterson concludes. 

Authored by: Frank Jacobs