Jose Luis Criado, LeasePlan International: “Geographical expansion is not a quick win”
Jose Luis Criado, Managing Director of LeasePlan International talks about the strategy of expansion, BRICs, and LeasePlan's next move.
“Our objective is to keep developing our service delivery to clients, offering real added value in the areas that matter most to them such as cost control and reduction, process optimisation and, corporate responsibility; in emissions reduction and driver care”, says Jose Luis Criado, Managing Director of LeasePlan International. The car leasing and fleet management company that was launched 51 years ago manages today over 1,3 million cars in 32 countries worldwide. “We continue to invest in improvements of our service and are, again, looking into geographical expansion. Last year we went to Russia, this year it's Canada. We don't have a defined country list, but we're closely looking at Eurasia and South America.”
You launched in Russia last year, how's it going?
JL Criado: "We have had a succesful opening of our office in Russia. It is good to see that those clients that asked us to do so, now also belong to our first clients in this region.
But I don’t have to tell you that Russia is big – it's basically the size of the US and Canada put together. It's very populated in the West and quite empty in the East, so there's logistics issues we don't have in Europe. There are 9 different time zones, what means that if you want to repair a car in Vladivostok, you can't call our Moscow HQ because people are still sleeping. So it requires a totally different set up of services. You have to learn to become efficient in the environment you're in. But clients do understand the situation as they are working in the same context.”
What exactly are you learning?
JL Criado: “In Russia, over 85% of fleets are purchased and leasing companies haven't earned the market's trust yet. Local clients want to first see proof of the value that the leasing option brings befor considering it for their own fleet – which is legitimate.”
Have you observed any problems with the politics going on in Russia because you're seen as a European company?
JL Criado: "If you refer to the situation in the Ukraine, we have so far not noticed any effects. Then again, as a company we do not have any operations in this specific region."
How important are BRIC and emerging markets for LeasePlan?
JL Criado: “LeasePlan is already present in three of the four BRIC nations - and they're key for growth. They're expanding markets and maturing fast to more advanced levels of fleet and TCO control. It's the same situation for Mexico. In terms of fleet management now it's still relatively in development, but because of its proximity to the US – it holds an interesting blend of the US and European leasing approaches.
The local culture influences how the market grows and also defines the profile of the clients. This all has an impact on the type of fleets you have in this area and the required fleet management approach. Brazil has a totally different identity to Mexico. Although the Brazilian corporate fleet market is, say, only half the size of Spain right now, in ten years it could be four times the size of Spain and that affects the whole industry.”
Volatility of currency in BRIC, is it a big influence?
JL Criado: “A very high currency volatility is a problem that goes hand-in-hand with a country's social development. A country needs to be socially mature enough to benefit from a car leasing industry – that's why certain markets are not there yet. For example even though there are more new cars sold in China than the United States, China isn't there yet; tempting as it is.
It's not just currency, but also the legal, judicial, political aspects – all these things you take into account because your investing for the long term; you go to stay.”
Is it fair to say that you see your geographical expansion as a long term strategy, not a quick win?
JL Criado: “Yes, we see it as a long term investment. We are in 32 countries to stay – when we invest in systems, training and setting up the whole operations, we do so on the basis of a long-term vision. We prefer to set up with our own systems, procedures etc. as we aim to give international clients a harmonised service experience. This isn't a very sexy example but if you have a Big Mac, wherever you are, you know what a Big Mac is, and that's what you expect, perhaps the dressing may slightly be different, but the burger is essentially the same everywhere.”
Finally, what tips would you offer for fleet clients looking to drive those efficiencies?
JL Criado: “When meeting with a new client we discuss their specific objectives around cost-control, process-optimisation, CSR, and we must define the purpose of the fleet within the company.
A car is is a business tool that has several purposes – it's a tool of trade, a motivational tool and a benefit in kind. All these objectives add value to the company which should be measured. For this reason it is important that the company, together with their leasing partner makes sure they get the most business value out of their fleet investment via a clear service level agreement supported by the relevant performance indicators."