20 Apr 23

Alain Van Groenendael, Arval: “6% growth in 2023 with plenty of customer-driven innovation”

Without looking at its annual figures, how can you tell that a company has had a good year? Here’s a clue: it presents those figures at the Peninsula, a five-star hotel a stone’s throw from the Arc de Triomphe in Paris. Last Tuesday, that company was Arval. Yours truly did have a look at those figures. And after the press conference, I had a conversation with Alain van Groenendael, Chairman and CEO of Arval. As the Michelin Guide recommends: vaut le détour.

In 2022, Arval’s global funded fleet reached a volume of 1.6 million vehicles across its 29 markets. That’s an 8.3% increase over 2021. In the corporate segment alone, Arval’s fleet grew by 5.9% to just under 1.1 million vehicles.

Doubling the fleet

If you look at the last 10 years, we effectively doubled our fleet. That is remarkable, more so because this is mainly organic growth. And that’s an indication both of the trust our customers put in us, and of the excellent work by our 8,000 employees”, says an upbeat Alain van Groenendael.

In parallel to Arval’s fleet growth in 2022, the company’s financial results also show a clear upward trajectory last year. Gross income was up 6% year on year, to just under €13.1 billion. Gross operating income rose 43.7%, to almost €2.5 billion. And net profit was up 73.4%, just shy of €1.25 billion.

“6% growth” in 2023

That positive trend has persisted into the first quarter of 2023, with growth up 8% versus the same period last year. Van Groenendael sees two main reasons for this. Firstly, businesses are getting back to ‘business as usual’, which means they need more vehicles to secure operational efficiency. And secondly, there’s clearly a War for Talent going on – and the company car is an important instrument to attract and retain that talent.

According to van Groenendael, 2023 will see the uptake of vehicle leasing continue to rise, in Europe and beyond. By how much? “You know me, I’m positive but not blindly optimistic. My cautious and considered opinion based on our 2023 results so far is that Arval should target a fleet growth of close to 6% in 2023.”

Balkans and APAC

Arval may pride itself on organic growth, but that obviously doesn’t apply to the expansion of the Element-Arval Global Alliance, which in recent days added a SIXT partner in the Balkans, meaning the Alliance, which is about 4 million vehicles strong, now covers 55 countries worldwide.

Without disclosing which geographies Arval will unlock next – either organically or via the Alliance – van Groenendael hinted that the recent renewal and strengthening of the partnership with Sumitomo, which is based in Japan, will create additional opportunities for Arval’s global fleet customers with a presence in the APAC region.

Arval Adaptiv

So, plenty of good news. But van Groenendael – positive, but not blindly optimistic, remember – also sees where the problems are. Vehicle delivery times, for instance. OEMs have upped production, but the supply chain is still wobbly. At the moment, Arval has outstanding orders on 300,000 vehicles.

To support its customers, who are waiting just like Arval itself on those vehicles, the company is proposing Arval Adaptiv – a subscription-based mid-term lease formula which has seen a year-on-year surge in popularity of +47%. That popularity is of course linked to the very supply challenges it is used to bridge. “But we’re also seeing more customers looking for more flexibility, not wanting to be pinned down on a 48-month leasing contract”, van Groenendael observes.

Electrification and connectivity

Electrification and connectivity are other areas of significant growth. Connected vehicles make up some 30% - roughly 450,000 vehicles – of Arval’s fleet. Van Groenendael expects steady growth of this segment. Connectivity in turn helps Arval electrify its customer fleets – where possible and reasonable. Arval’s target for 2025 is 700,000 EVs, of which half will be full-electric BEVs.

That will take some doing: at present, the company is at 300,000 EVs. Of its total fleet, 6.6% are BEVs, 14% are hybrid PHEVs. But if we look at the Arval orderbook, we BEVs represent 14.4% and PHEVs 21%. Meaning that together, EVs already make up the largest segment of Arval’s orders.

“One of the strengths of our EV journey is that we were willing to set strong residual values for EVs,” says van Groenendael. This allows Arval customers, local EV maturity permitting, to benefit from TCO parity between EVs and ICE models. “Everybody needs to play their part to make electrification happen, and Arval certainly does”, he adds.

Vehicle-to-grid charging

In that respect, the Chairman points to a few more elements of EV success: “Norway has the highest EV penetration in the world. That’s the result of government legislation and incentives, and of cities creating the infrastructure to make the transition seamless and easy.”

As for Arval, the company is taking on a new role: by offering Vehicle-to-Grid charging, it is becoming an energy partner for its customers. “Lots of cars are parked during the day, so vehicle-to-grid charging makes sense. That will benefit our customers, and we will become distributors of green energy.”

Pillar of growth

Arval is the daughter of BNP Paribas, the France-based banking giant. It’s a privileged position, but one that comes with high expectations as well. BNP Paribas wants to become the preferred partner for mobility, thanks to the transversality of its business lines. It is aiming for mobility services to generate €1 billion in revenue, by offering a full range of those services via its different business entities, according to their expertise.

Obviously, Arval is going to play a key pillar of this growth, given its expertise in financing mobility assets and consulting corporates on mobility strategies. So, to enhance its offering, Arval will cultivate even more partnerships in the automotive, mobility and finance spheres; and it will continue innovating its services and solutions to secure a comfortable and seamless mobility experience to its customers, being it individual, flexible or shared mobility.

Ambition and competition

Some innovation examples include the Connected Insurance programme, currently piloted with 600 vehicles and drivers; a Mobile Service solution offering service and maintenance directly on customer premises; last-mile initiatives involving e-cargo bikes; the expansion of Arval Premium Centres, which respond to specific fleet customer needs; the rollout of Arval Mobility Hubs, bringing together a variety of mobility modes, offered to employees via a mobility budget; and digital tools like Online Booking for customers, or voice recognition services for drivers.

Despite the plush surroundings of the Peninsula, Arval nor van Groenendael himself are resting on their laurels. Both the company and its Chairman-CEO have clear ambitions to accelerate growth and further improve their offering – without ignoring the elephant in the room, i.e. the impending merger of ALD and LeasePlan. “Competition is good and healthy. If our competitors know what they want and how to get it, that’s great. Because we at Arval certainly know what we want, and how we’re going to get it.”

You have the opportunity to meet with Alain van Groenendael and Arval at the 2023 Global Fleet Conference in Cascais from 15 to 17 May. Mr van Groenendael will participate in the executive leasing panel on 16 May. More information about the conference and the programme, here. 

Authored by: Steven Schoefs