Lease companies: don’t forget about your customers in 2022

Do you remember Wednesday 27 October? If you’re in the European vehicle leasing business, it should ring a bell. On that day, LeasePlan and ALD Automotive announced they were talking to each other about combining both leasing giants into a new global mobility leader. The announcement was the icing on the cake. Because even before, 2021 had been a very interesting year for leasing in Europe.  

By Steven Schoefs, Editor-in-chief, Fleet Europe (pictured)  

The biggest issue for corporate fleet customers in Europe this year was vehicle supply, or the lack thereof, due to the chip shortage. This added frustration and annoyance to an existing crisis: fleet customers had already been extending lease contracts since the outbreak of the pandemic. Now once again, they were forced to extend contracts – or deal with delivery times of up to seven months in general, and in some cases much longer still. Fleet customers who are ready, willing, and able to accept shipments of new vehicles, and fleet suppliers who aren’t able to deliver, or at least not in time. It all made for a very frustrating end of the year.

Small mercy

One small mercy for the leasing companies: the supply problem is the same for all of them, so it has not become subject to a pricing war between competing suppliers. However, the issue is having an increasing effect on the strategies of fleet managers. They’re gravitating towards more risk-averse solutions, by integrating more flexible solutions and shorter-term contracts into their policies. The aim is, of course, to be able to anticipate and react to possible new crisis situations. Even if it means loosening the ties to their traditional lease suppliers.

The good news is that leasing companies across Europe are hearing what customers are saying. And they are responding accordingly, by investing in new mobility solutions and flexible products and services. This quote from Alain Van Groenendael, CEO of Arval, at the Executive Debate during the recent Fleet Europe Summit in Brussels, may serve as a good summary of the suppliers’ sense and sensibility: 

“The standard model of the company car is evolving, moving towards salary sacrifice, mobility budgets, shared vehicles. But not so much. A more important trend: companies asking us to provide mobility solutions for all their employees. I’m optimistic that the growth of the latter phenomenon will more than compensate any losses in the former one.”

Outsourcing principle

Indeed, reports of the death of leasing are greatly exaggerated. Demand for the leasing product is still high in Europe, confirming that European fleet managers like to stick with the outsourcing principle, both when it comes to fleet funding and fleet management. In fact, they are keen to do the same with corporate mobility solutions, on the condition that it too can be offered seamlessly, in an integrated way, and across national borders.

If mobility solutions are to be provided with the level of quality in terms of services and products that fleet customers have come to expect, then their providers will need to develop economies of scale – both operationally and financially. 

And that, exactly, is the task for leasing companies today: to develop that scale, in the first instance to recuperate their investment in the various mobility solutions they aim to provide. This also explains why the customer scope of the leasing companies is widening: no longer merely providing B2B services, lessors are branching out into B2B2E services, and even into B2B2E2C services.

Because of this need for scale, we are likely to see a raft of mergers and acquisitions by lease companies in the upcoming year. As we have already seen in 2021. Take for example ALD acquiring car subscription specialist Fleetpool and MaaS startup Skipr. Expect much more of that in 2022, and from many others.

Providers and integrators

This dovetails with the fleet customer’s expectation: that leasing companies develop into true mobility providers, and even mobility integrators. And indeed, because of their experience in delivering car-based service solutions, leasing companies may be best positioned to become the experts in delivering integrated mobility management as well. 

That will require much more than lease companies merely merging and acquiring themselves into the appropriate size. Leasing companies across Europe know they need to increase their digital capabilities. They are doing so by focusing on connected technology, and by streamlining internal processes, and supporting the external customer’s fleet and mobility management journey. 

As they see the trend towards consolidation accelerate throughout 2022, fleet customers are fearful that the emerging landscape of the leasing industry will consist of very little middle ground – or, to turn the metaphor around – a very big gap – between a few large players and a multitude of very small ones. It would be a Champions’ League of Mobility, but one in which the playing field would leave very little room for competition. 

Wanted: seamlessness

And competition is precisely what’s needed. Also in the EV space. As the results of the 2021 Global Fleet Survey show, no less than 90% of European fleet managers expect the number of full EVs in their fleets to increase by the end of this year. That’s a higher share than in any other of the world’s regions. Fortunately, the leasing companies are making a tremendous effort to electrify the vehicles in their portfolios, each in their own way. Some examples:

  • ALD expects 30% of its new car deliveries to be EVs by 2025, a figure that will rise to 50% by 2030.
  • LeasePlan transitioned its own fleet to BEVs by the end of 2021 and aims to go net-zero with its entire funded fleet by 2030.
  • Arval has just scaled up the EV penetration target from 500,000 to 700,000 electrified vehicles by 2025.

Despite new-vehicle supply issues, it’s clear that 2022 will be another fleet year dominated by EVs. Lease companies are fully aware that the future will be electric, and are – as you would expect them to do – laying the groundwork for an integrated offer, based on preferred partnerships with suppliers in other EV domains, such as charging and connectivity – which will help make the EV customer journey a seamless one. 

Seamlessness: that is what the fleet customer wants, whether the issue is leasing, mobility solutions, or fleet electrification. Consequently, that is what fleet suppliers must strive to offer. This is a key message for leasing companies. As they strive to achieve economies of scale, they should not lose sight of their most important and most valuable asset, their customers. They must always put their customer first. The first step is to internalise this fully and communicate this clearly. Because whatever customers demand, is what customers deserve. 

Authored by: Steven Schoefs