There’s nothing like a pandemic, a vehicle shortage crisis, and a growth spurt to make you examine your internal processes and reorganize your business structure.
Ask Jeff Perkins of Motorlease: “We have seen a tremendous amount of growth in the last 12 months,” says Perkins, who was recently appointed president of the Farmington, Conn.-based fleet management company. “But it was as a result of everything that we had put in place through the previous 12 months.”
With 20 years at Motorlease, Perkins comes from the operations side where he oversaw purchasing and remarketing. As Perkins transitions roles, he’s overseen a reorganization of the company’s operations and business development teams — at the same time as the company’s vehicle portfolio, client base, and employee headcount have grown.
While the company’s business structure has been reorganized, the executive management team has long-time tenure. Beth Kandrysawtz will continue as CEO for Motorlease, which her family has owned for 75 years. From her home in Florida, Kandrysawtz is still heavily involved in the company and communicates regularly with the management team, Perkins says.
Executive leadership also includes Joe Pelehach, VP of business development, Justin Mesick, controller, and Brad Lutz, VP of technology and customer experience.
Opportunity to Restructure
Motorlease’s operations department has been expanded and separated into two divisions: service, which includes remarketing, maintenance, and insurance; and vehicle acquisitions, which covers purchasing, registrations, deliveries, and logistics.
The business development team has been restructured too. Before the reorg, Motorlease’s account executives would prospect their own accounts and maintain those relationships through to closing the deal. Now, “We've segmented some of those responsibilities to make (the process) more efficient,” Perkins says. “We’ve created more of a manufacturer assembly line approach.”
The new structure recognizes individual strengths: “We have people that are good at prospecting, and we have people that are good at maintaining those relationships. And we have really good closers now.”
The business development team is in charge of prospecting new clients and onboarding them. A newly created sales development rep position feeds the company’s leasing consultants, which in turn feed the reps responsible for closing sales. Those clients are then transitioned to the customer experience team, which is tasked with maintaining the relationship.
“We found a huge amount of success with (this new process) and took that opportunity during COVID to really fine tune it,” Perkins says.
Getting Creative for SMBs
With clients in every state and Canada, Motorlease’s sweet spot is — and has been for 75 years — the SMB market with fleets of 15 to a couple hundred units. “Right now, a lot of our competitors are shying away from that segment,” Perkins says, owing largely to manufacturers’ tightening of fleet allocation.
Those fleets are replacing a few vehicles annually, but not enough volume to be awarded allocation by the manufacturers, which makes it much more difficult for them to order vehicles moving forward. “You have to get creative with alternatives for them, whether it's purchasing out of (dealer) stock or maybe there's another manufacturer with vehicles that might fit their need,” he says.
That also entails creative spec’ing. For instance, if a truck order is delayed, will an SUV with seats that fold flat and an installed slide-out bed or drawer work? Perkins says Motorlease has 100- to 150-unit service fleets running small SUVs that carry toolboxes and other supplies.
With passenger vans and minivans still hard to come by, fleets moving people have fewer options to get creative. Seven-seat SUVs are a limited option. “Some nonprofits and fleets using people movers are really struggling right now,” Perkins says.
While larger fleet management companies are configured to manage large fleets through digital dashboards and enterprise integrations, for Motorlease’s clientele, “We are here to hold their hand,” Perkins says.
Motorlease writes 80% closed-end leases and 20% open-end finance leases. Perkins acknowledges that the competition’s shift to open-end leases gives Motorlease latitude to serve those clients that would prefer a closed-end lease. The typical average Motorlease lease term is 36 to 38 months and 60,000 to 70,000 miles.
“We’re for fleets that don't want to be in the car business; they want an outsourced partner,” he says. “Their drivers tend to be highly compensated individuals, whether it's top salespeople or executives or service people who are on the road making them money to keep their businesses going.”
“When a new car arrives, they get to hand us the keys to the old one and get to doing what they need to do.”
The biggest challenge remains vehicle availability and the new normal of early order cut offs and quick model sellouts, sometimes in 24 hours.
Perkins says this high-price, tight-supply environment is pushing some clients away from reimbursement, as drivers are having a hard time acquiring a personal vehicle and would prefer one provided by the company. “They shift to a lease with a fleet management company that has some buying power,” he says.
Vehicle Disposal & Remarketing
When it comes to vehicle disposal, Motorlease has dabbled in retail consignment in the last few years. But with strong wholesale prices today, the company has backed off from retail.
Motorlease has taken advantage of the growth of simulcast auctions, in which cars are run in lanes while buyers can also bid online, which expands the buyer network nationwide.
Prior to the pandemic, Motorlease sold about 75% wholesale through the auction lanes and 10% through retail remarketing channels. About 15% were sold directly to the drivers or to the grounding dealership for the lease.
With drastically reduced vehicle availability today, that percentage has shifted more heavily to sales to drivers and direct to dealers hungry for used units to sell. “Those dealerships are willing to pay a lot of money just because of the availability of vehicles and they know they don’t have to go to the auction,” Perkins says.
Hybrids have grown in Motorlease’s vehicle portfolio over the last eight years. The premium for a hybrid over a gas-only vehicle isn’t exorbitant and that value is recouped — and then some — at resale.
Perkins can write a closed-end lease on a hybrid for $30 to $50 a month less than a lease for a gas-only vehicle. “It makes a ton of sense,” he says. “You save money on fuel and the lease payment, and it's the right thing to do.”
Regarding making the move to full fleet electrification, some clients are beginning the process, such as a small rollout of EVs into a pool fleet at a corporate headquarters. Another client with a fleet of several hundred cars has made wholesale changes to its selector list. The client now only offers plug-in hybrids (PHEVs), hybrids, or fully electric (BEVs) models, with gas-only models no longer available.
But most clients are just at the point where they’re asking questions on where to start. It must make sense for them, Perkins says, based on duty cycles and cost structures. “We're experiencing a lot of fleets that are interested, but they're not all in yet,” he says.
As EVs are essentially software packages with untested aftermarket value, “I'm concerned about how long-term residual values may hold up with them” he says.
Overall, Perkins says Motorlease is poised to meet these changing needs in whatever facet of fleet management. “There's a lot of changes coming to how we buy vehicles, how we sell vehicles, and how we power them, and then how we keep the equipment inside them,” he says. “It's all changing. It's really interesting.”