Nick Salkeld, CCO LeasePlan: “Innovation is in our DNA”
In 2015, LeasePlan's profits rose by 19% to €442 million, with vehicles under management increasing by 9% to 1.55 million. Impressive, especially as LeasePlan already is the world's biggest lessor. Nick Salkeld, LeasePlan's CCO and member of the Managing Board, explains the company's success – and how it intends to keep it up.
Success has many fathers, the saying goes. LeasePlan is very aware of the many reasons behind its strong showing, Nick Salkeld explains. “We're seeing strong growth, across a wide range of segments, and also in terms of our total assets. We've also been supported by stronger than expected used termination results, a lot of that driven by the remarketing channels and approaches that we've developed”. Add to that the continuing improvement of LeasePlan's insurance business, up over 10% in 2015, and you get a rosy picture.
Growth has not been limited to any particular region, but has been truly global, “from mature markets like the Netherlands, France, the UK, the US and Germany to developing markets like Mexico and Turkey and Eastern European markets like Poland and the Czech Republic”, says Salkeld. “The big declines post-2008 are now mirrored by big improvements in the operating lease market”.
Geographic diversification has been a clever strategy in more ways than one. “We in the lease industry often spend too much time competing against each other, while we have great opportunities to grow the market as a whole by showing companies and individuals the benefits of moving away from traditional finance leasing or other loan transactions. Even in mature markets like Italy and France, operating lease penetration is relatively low – 10% and 15% respectively”.
SMEs were the fastest-growing market segment, increasing over 12% in 2015, but other segments have also proved bountiful. Private lease, for instance, in the Netherlands, Belgium, the UK, Italy and even Norway. “And our corporate segment grew by 7.5%, double our achievement in 2014. Our international segment increased by 8% - important, as it represents over 30% of our portfolio”.
SwopCar and FlexiPlan
With SwopCar last year and FlexiPlan this year, LeasePlan has introduced two flexible, innovative products – both responses to changes in the mobility landscape. “As a result of trends such as urbanisation, sharing, eco-awareness, mobile devices and connectivity, we foresee a shift from vehicle-oriented services to individual driver-oriented services. To stay ahead of these changes, LeasePlan has developed a mobility strategy which has resulted in forward-looking, flexible solutions. We developed the SwopCar and FlexiPlan service in order to meet the growing demand for driver mobility solutions beyond the traditional lease product. Both are good examples of our approach: we aim to offer solutions that allow car usage from hours to years, for small and large companies. Solutions which acknowledges the increased demand for smart mobility and multi-transport use.”
The SwopCar solution gives clients a way to better share their vehicles among their employees. FlexiPlan, on the other hand, focuses on the 1 to 24-month market, for companies unwilling to commit to longer-term contracts. “It's in our DNA to innovate – and to cooperate. For example, we're working closely with Denmark-based company GoMore, which organises ride-shares and short-term rentals, also in Sweden, Norway and Spain”.
Private lease is another innovation. “We wouldn't be dreaming of it eight years ago. But now we believe we need to do it. It's an important shift, and LeasePlan wants to lead the industry. Our private lease programmes are increasingly successful. They will be an important part of our growth”, Salkeld predicts.
LeasePlan sees a big role for telematics in reducing CO2 emissions and insurance cost, “taking into account all relevant privacy requirements, which vary according to country – and customer”.
With 50 fully trained fleet consultants around the globe, LeasePlan is the only lease company with a dedicated mobility consultancy anywhere on the planet. “They will help our customers figure out their total mobility and help them identify the combination of products and services that best suits their needs. Our 50 specialists around the world also give customers continued advice on cost savings opportunities. During 2015, our consultants successfully identified over EUR 85 million in cost savings for LeasePlan clients. Those skills will be in increasing demand”, Nick Salkeld observes.
2016 and beyond
LeasePlan has strong growth ambitions for this year too. “The prospects are good. We are keen to keep focused on growth, both locally and internationally. But we don't just want to grow. We want to keep leading the market in delivering high-quality, innovative services to our clients. Creativity, not complacency!”
Some emerging economies are struggling. For example Brazil and Russia – two countries with a LeasePlan presence. “We're doing well in both markets”, says Nick Salkeld. “A lot of our international customers were very keen for us to open up in Russia. We're very happy with the progress we've made, even though the Russian economy's future is uncertain. In Brazil, we've had some ups and downs – but we're happy with our performance there. Our local management is excellent, and we're positive about the future”.
LeasePlan is not yet present in China, but that is only a matter of time. The company is exploring opportunities there, through a greenfield or a partnership approach. “We are opening up in Malaysia this July, though. We'll use it as a base to expand into South East Asia as soon as possible. We have high hopes of strong growth in the region”.
Expansion into Latin America is also on the cards “given the right partner – although we're not saying no to a greenfield site in the region either”. All those plans are driven as much by global demand as by local opportunities: “International clients ask us when we will enter those markets. It makes sense from their point of view – economically, and from a consistency of service point of view”.