Markus Deusing, CEO Alphabet: “Change is a chance – in every aspect”

At the start of this year, Markus Deusing succeeded Marco Lessacher at Alphabet International, BMW Group’s multi brand leasing subsidiary. The industry is in the midst of a major transformation - and it is this change that makes this role even more exciting for Markus Deusing.

Despite the pandemic and other challenges, your most recent annual report shows you had a good 2021 – as did many other leasing companies. What are your ambitions for 2022?

“Our aim is it to continue the path of healthy growth. However, we must also acknowledge today’s very difficult market conditions. Corona was one challenge for all of us. Now we’re facing several major difficulties all at once. There’s the war in Ukraine. There’s vehicle demand, which has picked back up faster than OEMs can meet it, leading to long delivery times. On the LCV market, we’re already talking about deliveries in 2024 in some cases.”

“We aim to grow in different segments from market to market because each has a different area of potential. Last year, we have developed strategies for each market separately: with more potential in the larger fleet segment in one market, more in the medium or smaller segment in other markets. We’ll be constantly revising that strategy, as markets evolve.”

“In order to grow, we have to meet new market challenges like digitisation and sustainability. Especially since our customers are asking us to help them develop their ESG (environmental, social and governance, Ed.) goals. Apart from that, my core focus at the moment is digitising the customer interface and automating the back-end processes.”

How is the war in Ukraine besides others affecting you?

“Alphabet does not have any activities in the country, but from some OEMs we got to know that it’s an important source for parts for example. This is in addition to delivery of parts from other places in the world, especially Asia, still not running as smoothly as before the crisis. Plus, shipment costs are rising. And then there’s the ongoing chip shortage in general.”

That adds up to a situation in which you and your customers are having to look for other solutions. Contract extensions are one thing. But I imagine you can’t keep doing that. So, what else can you do?

“Indeed, you can’t keep extending lease contracts beyond, say, 80 months. What we’re currently working on is increasing the number of vehicles we can provide to cover long lead times. This is our rental fleet, at the moment with more than 20,000 vehicles across Europe. We’re also seeing that our customers are now interested in new car brands that were previously not used in the fleet industry. It’s very interesting to see how this will develop.”

You mentioned before, focussing on digitalisation is key. Does your push for more digital mean that you’ll be doing more with less people?

“That is not the case, our focus is it to reallocate employees to fulfil customer needs, such as consulting, even better. Technology offers many opportunities that things can be done by automation, bots or AI. One important point in our new brand architecture is: we want to guide our customers to better mobility – meaning, more cost-effective, more flexible, more ecological, and more social as well. For this you need skilled people who know the business well.”

“Instead, thinking of online booking for service and tyre appointments, for example, or configuring the next car via our app, from the sofa – these processes can be digitised. This will not only make the lives of the drivers easier, it will also help fleet decision makers, and free up time for our internal staff, so they can better focus on consulting the customer.”

Let’s talk sustainability. Just last year, the EV share of your new orders grew by 70%, to 46,000 vehicles. And you want the share of electrified vehicles to rise to 30% of new business. Considering constraints like the chip shortage and long delivery times, is that still realistic?

“The customers are demanding electrified fleets at a very high number. In some markets, up to 40% of all vehicles ordered are electrified ones, most of them BEVs. Frankly, I hadn’t expected customers to drive the transformation towards BEVs so quickly, I expected the PHEV phase to last longer. Our customers are under pressure to lower their CO2 footprint fast, and they translate that pressure to us.”

“It’s going to be demanding to deliver all these vehicles, yes. In that respect, it’s good that we now also have BEVs in our rental fleet, which helps us to cover the transition time. Now, I know you’d like me to give you a figure for how many of Alphabet’s portfolio will be electrified by 2030. I cannot do that. It would mean, Alphabet tells its customers what to do. For us, it’s important to consult the customer regarding the best fulfilment of the mobility needs in terms of ecology, economy but also of mobility.
It’s no use to have a 100% electric fleet, if that means you can’t visit your customers anymore in the same time as before, for example.”

“We will guide the customer to better mobility, to give you an example: We have a new CO2 emission simulation tool, showing customers the effect of changing to BEVs immediately, after the contract duration time or the implementation of additional CO2 lowering options. This gives them a good overview on the costs – and the return – of the investment.”

Do you offer other contract forms for BEVs and ICEs, for example in terms of running time or services included?

“At the moment, we don’t see a difference between ICEs and BEVs when it comes to contract terms. In some markets, for example in the Netherlands, the BEV is becoming just another regular vehicle – so, no big change to contracts necessary. Of course, not all European markets are as advanced.”

“The good news is that ICEs and BEVs are getting closer in terms of Total Cost of Ownership (TCO). This is due to price developments for batteries, fuel and the availability of remarketing data which has a positive effect on the residual values (RVs)”.

In 2019, Alphabet partnered with Unidas in Brazil. Earlier this year, you announced a partnership with Jim Pattison Lease in Canada. We always had the impression that Alphabet was focused on Europe. Are you now going global?

“We are where our international customers need us to be. About 20% of our international customers have a subsidiary in Canada, so we went looking for a local partner. Jim Pattison is a fantastic company with a dozen locations nationwide. So, our partnership will definitely help us deliver better customer service, for example by integrating all Canadian activities into our reporting via Alphabet OneNet, our global partner network.”

“This is also how we did it in Brazil, and how we will continue to do it elsewhere. Our plan is to find partners e.g. in Asia and South America, so we stay relevant for big international players. Right now, we’re talking to two potential new partners”.

Can you clarify the reasoning behind the merger, at least in some markets, between Alphabet and BMW Financial Services?

"Let me begin by saying that Alphabet is not going away. We’re not merging brands. Internally, we’re constantly looking at which services Alphabet and BMW Financial Services can share, to better respond to changing customer demands.”

“As you know, many private customers are currently asking for operational lease solutions. That is the motivation behind the closer cooperation between Alphabet and BMW Financial Services in the Netherlands and the UK. Similar cooperations are looked at for other markets, but nothing has yet been decided.”

“For the Alphabet customer, nothing will change. Alphabet will remain a very important, valuable and crucial part of the BMW Group.”

Final question: What can you tell your customers about Alphabet that they don’t already know?

“It’s a good question. I’m afraid my answer may disappoint you: we have no surprises for our customers. Alphabet is known to be very open, very transparent. We’re quality-driven, and we value the personal connection to our customers. What I can tell you: we have the plan to further grow, to heavily invest into IT and we will expand our geographical coverage. So I’m sorry – no hidden agendas!