The Car and Truck Fleet and Leasing Management Magazine

Blog: Car Leases Transforming the European Business Model

February 2017, by Caroline Thonnon

Thonnon
Thonnon

Calendar-year 2016 was another exciting year for fleet management and lease companies in Europe – with acquisitions and consolidations, global partnerships, and new CEOs. With new visions and new strategies, the time was ripe to transform the business model. Mobility management is here to stay. And additionally, the private market is increasingly coming into focus. We are witnessing a smart revolution in the car lease world, one that will see its impact in 2017.

Car manufacturers are eyeing a share of the lease business. There are plenty of examples: BMW’s Alphabet model – launched in 1997 - is gaining a following. PSA Bank and Santander Consumer Finance develop their partnership in Italy and the Netherlands, following similar deals in France, Spain, the UK, Portugal and Switzerland.

In 2016 a new big entrance was officialised: after months of rumours, it finally was Mercedes-Benz Financial Services, that got the deal done and acquired multibrand car leasing and mobility service company Athlon International, the alliance partner of Donlen in North America. The deal, worth 1.1 billion euros, includes all 14 markets where Athlon International has subsidiaries, and will give Daimler Financial Services the opportunity to expand its fleet and mobility services as a multibrand service provider under the Athlon brand with a portfolio exceeding 350,000 vehicles.

And finally, at the 2016 Paris Motor Show, car group PSA – with brands Peugeot, Citroën and DS - launched Free2Move, a new brand gathering together all the Group's new mobility initiatives. Part of this structure is Free2Move Lease, a leasing offer that was launched in France and the UK in January 2017 and will further expand to other European markets this year.

More Consolidation and Global Alliances

On the consolidation side, ALD Automotive acquired the 61,500 vehicles of Parcours Group in France, Spain, Belgium, Luxemburg and Portugal. The company subsequently acquired Hungarian fleet management company MKB-Euroleasing Autópark and its Bulgarian subsidiary MKB-Autopark. In March 2016, ALD Automotive already acquired Dutch leasing company Bright Lease, consolidating its position on this mature market.

ALD Automotive and Wheels were also the first major international fleet companies to access the Argentinean fleet market, via a deal in June 2016 with AutoCorp. This new partnership reinforces ALD Automotive’s presence on the South American continent, following on recent openings of ALD subsidiaries in Chile and Peru.

And the conquest of Latin America continues: ALD and Wheels also extend their coverage into Central America, signing a partnership agreement with Arrend Leasing, a Guatemala-based car leasing company present in four Central American markets. In the beginning of 2017 ALD’s mother company, banking institute Société Général, announced the plans to float its car leasing branch ALD Automotive still this year on the stock market. ALD Automotive has almost 1.4 million vehicles under contract.

ALD Automotive is not the only car leasing company focusing on Latin America. Arval and Relsa completed their joint venture in South America. And the Element-Arval Global Alliance has added RDA Renting as a new member, growing the world-spanning fleet management partnership to 50 countries. RDA Renting operates in Argentina and Uruguay. In 2016 Arval proudly announced passing the milestone of one million vehicles in management in its 28 markets across the globe.

New Shareholders

The consortium of long-term investors that purchased LeasePlan in the middle of last year for a total of 3.7 billion euros has completed the acquisition. “Today marks the start of a new era for LeasePlan”, said LeasePlan CEO Vahid Daemi.

At the start of September, LeasePlan welcomed a new CEO: Tex Gunning made clear he intends to effect great changes within the lease company, with a more centralised approach and a move from a multi-local organisation to a fully integrated One LeasePlan organization, leveraging the scale and best practices of LeasePlan across its 32 countries to enhance efficiency. In terms of the fleet under contract, the LeasePlan fleet grew by 8% to 1.674 million in 2016. 

Mobility Integrators

Meanwhile in Europe, car lease companies are profiling themselves more and more as fleet management providers. From Leasing to Consulting to Mobility Integrators, the focus is not just on the fleet manager but also on the employees, who are in charge of their own mobility.

One: the Business Model Is Changing

For years, operational or full-service leasing was all about financing, insurance, maintenance and repair, and controlling residual values. Then, leasing companies developed a fleet consulting approach to help fleet managers with the car policy, global reporting, greening the fleet, implementing telematics and car sharing and driver communication.

Now, leasing companies are focused on becoming mobility integrators; on delivering added value through mobility services, data management and connectivity. Fleet management specialists and leasing companies are in the process of becoming mobility and travel management companies. Huge efforts are being made to provide high-tech apps and digital platforms that put the employee in control of his or her own mobility. These apps will influence the travel behaviour and the vehicles chosen. Key words are: mobility budgets, private lease and predictive flexibility. And the result is lower costs and lower CO2 emissions, combined with a greater driver satisfaction.

Two: the Client Is Changing

For years, leasing and fleet management companies did business with fleet managers and the procurement/purchasing department. We expect the traditional fleet manager to slowly disappear and we call the new people in control the “Global Mobility Architects”. Also, the employees get more and more of a  say. They want to be in control of their own mobility, so they want to shop between the services provided by the integrators.

Three: the Business Environment Is Changing

Let’s call it the jungle, because the competition is going berserk. Everyone wants a piece of the cake: Car Manufacturers, their spin-offs in car sharing, the disruptors, the travel management companies, the daily rental business. Start-ups have been pushing innovation into the market. In 2016, more than ever, we saw the manufacturers (re)enter the leasing market, a trend that will continue in 2017.

Editor's note: Caroline Thonnon is the CEO of Nexus Communications.

P.S. Check out the latest on the 2017 Global Fleet Conference in Miami June 6-8, 2017: www.globalfleetconference.com

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