With $80 billion in managed assets, Toyota Financial Services (TFS) is the third-largest captive finance company in the U.S., offering an extensive line of financing plans and vehicle protection products to customers and authorized dealers.
In November 2007, TFS launched Fleet Solutions, which offers a suite of finance products and fleet management services designed to meet the needs of commercial fleet customers. Its products and services run the gamut of fleet needs, ranging from vehicle funding to remarketing.
Gerry Schuckman, corporate manager, is responsible for the 110-member Commercial Finance Group, which includes Fleet Solutions. Richard Pipenhagen, national sales and marketing manager for Toyota Financial Services, heads up the Fleet Solutions team.
In addition to Fleet Solutions, Pipenhagen also manages the Toyota lift truck and material handling sales organization and the Hino/commercial truck sales organization (Classes 3-8). Both the lift truck/material handling and Hino/commercial truck organizations represent a captive finance arrangement via the dealer franchise network.
Fleet Solutions is a sales and customer service organization within TFS that insources and outsources the various fleet management services it offers to commercial fleet customers and Toyota dealers. It also focuses on financing for the daily rental marketplace.
“TFS Fleet Solutions does not want to become another fleet management company. This is not Toyota’s goal. We took a hybrid approach of insourcing and outsourcing fleet services for traditional fleets, as well as the daily rental business,” said Pipenhagen.
Lease & Finance Options
Vehicles funded by TFS Fleet Solutions are primarily fleet-ordered vehicles, with a small percentage acquired out-of-stock from dealers.
One funding option is an open-end lease with a terminal rental adjustment clause (TRAC). TFS Fleet Solutions also offers a closed-end leases, as well as a finance plan with various flexible financing plans. All monthly lease and finance payments are consolidated into a single statement.
TFS Fleet Solutions offers vehicle credit lines. These pre-qualified vehicle credit lines allow fleet customers to acquire vehicles under any Fleet Solutions plan. Fleet credit approvals are provided by the Commercial Finance Group.
“As part of our insourcing strategy, we used the existing structure of the Commercial Finance Group for credit approval and to service leases and loans,” said Pipenhagen.
Why Fleet Solutions was Created
TFS launched Fleet Solutions for a variety of reasons. A principal motivation was to support the launch of the then all-new Toyota Tundra pickup truck. Toyota wanted to leverage TFS products and services to help increase the truck’s penetration into the commercial fleet market.
Additionally, Toyota Financial Services’ customers were asking for fleet-related services.
“We have developed many relationships with fleet customers through the Commercial Finance Group over the past 23 years it has been in business,” said Pipenhagen. “Most of Toyota’s transactions have been in equipment handling, forklift, and medium-duty trucks through its affiliation with Hino and Hino dealers. However, many of these customers also operate vehicle fleets and were asking Toyota to enter the fleet services business. They would ask: ‘You are financing our forklifts and medium-duty trucks, why can’t this all be put under one credit line?’ ” added Pipenhagen.
Another reason why Fleet Solutions was launched is that the Commercial Finance Group was becoming more involved in the truck financing business. “There were some Toyota dealers who were asking TFS to enter the fleet services business. These dealers wanted to become more of a fleet sales organization and not just an order processor,” said Pipenhagen.
Fleet Solutions has a national sales force comprised of three regional managers — Robert Piot, West; Jenny Larkin, Central; and Tina Orwick, East. “Our initial focus is on existing Toyota relationships and doing more for them,” noted Pipenhagen.
TFS Fleet Solutions sells its products and services through two channels.
One is the dealer channel. “The dealer has the sales force. They contact the fleet customer and order the cars. They make the profit on the sale of the vehicle and Fleet Solutions enters as their partner and negotiates the lease agreement with the customer and offers them management services,” said Pipenhagen. “This allows Toyota dealers to have a full-service fleet operation they can call their own.”
The second channel is provided by Fleet Solutions. “In this channel, Fleet Solutions does the sales work, not the dealer. Fleet Solutions calls on the customer (typically a commercial truck group or lift truck/material handling group customer), orders the vehicles, and manages the drop shipment. Fleet Solutions is dealing with fleets that are too large for dealers, who require nationwide deliveries. We are just another lease company that just happens to have Toyota in its first name,” said Pipenhagen.
Although TFS Fleet Solutions has existed less than a year, it is already experiencing double-digit growth.