ALD Automotive has signed a memorandum of understanding to acquire LeasePlan for €4.9 billion (USD $5.5 billion). The new company will have a total portfolio of 3.5 million vehicles under fleet management, and this massive scale-up will enable ALD Automotive to become a leading mobility provider on a global scale with greater breadth of products and a broder geographic reach.

ALD Automotive says that the new combined company will help it create a digital model that can compete on both service and costs with captive finance companies as well as new tech players breaking into the market.

To learn more about the pending acquisition, Automotive Fleet recently interviewed Tim Albertsen, group chief executive officer of ALD Automotive.

AF: THE PENDING ACQUISITION OF LEASEPLAN BY ALD AUTOMOTIVE REPRESENTS A HISTORIC EVENT IN THE HISTORY OF GLOBAL FLEET MANAGEMENT BY CREATING THE LARGEST FLEET MOBILITY, LEASING, AND MANAGEMENT SERVICES COMPANY IN THE WORLD. BUT BEYOND THE SIZE OF THIS MERGER, HOW WILL THE PENDING  ACQUISITION BENEFIT ALD AND LEASEPLAN CLIENTS?

ALBERTSEN: You have to see it in the light of what’s going on in the mobility sector overall because it’s moving very fast. We have seen in the past three to five years that our business is very well positioned with new products and services that are evolving with these mobility trends, whether you are a consumer or corporate user. The fact that we joined forces between ALD and LeasePlan, it will make us one of the largest in the world.  Doing what we are doing will give us a lot of muscles to develop and keep the edge in this industry in terms of new products and new services. And we will keep this customer-centric focus we have had for many years, both at LeasePlan and ALD Automotive.

It’s also true to state that we anticipate that competition will look different going forward because we have become a more mainstream business. So we’ll probably see a lot of the manufacturers entering our space. If you look at the vehicle manufacturers today, some of them already have quite a significant footprint in our market. 

This combination of ALD and LeasePlan, as I said, gives us the muscles to actually keep evolving and developing the best products we can for our customers. Also our geographic footprint will be further expanded with this to make sure that our global customers can have an offer from us in most parts of the world. And last, but not least, we are merging two leaders of this industry who have the best people in the industry. It will make us an even stronger player that has the DNA of the two companies that are focused on being customer-centric.

AF: THE MERGER DEFINITELY REPRESENTS A CONSOLIDATION IN THE FLEET  MANAGEMENT INDUSTRY, BUT, AS YOU’RE SAYING, IT’S GOING TO BECOME A MORE COMPETITIVE INDUSTRY BECAUSE THERE ARE GOING TO BE ADDITIONAL  NONTRADITIONAL PLAYERS ENTERING THE MARKETPLACE. 

ALBERTSEN: Yes, you could say that. Today, our direct competitors can be easily identified. The global trend has been away from ownership and transitioning to a more user-ship model. In five to 10 years, it will be difficult to imagine that people will actually go to the bank and take a loan to buy a car. Everything will be a subscription or will be on a leasing contract to get access to the vehicle. But you don’t actually get the ownership of it, for which we are very well positioned. But obviously this is the way the market is going and that competition will be intensified over the years, no doubt about that. 

AF: IN ADDITION TO THESE SYNERGIES, WHAT OTHER SYNERGIES DO YOU FORESEE RESULTING FROM THE MERGER OF ALD AND LEASEPLAN? WILL THIS HELP YOU BE MORE COMPETITIVE WITH THE NEW NON-TRADITIONAL FLEET COMPANIES THAT ARE ENTERING THE BUSINESS? 

ALBERTSEN: Yes, this is a scale business, always has been. With the new entrants, who potentially could have more muscles than what we have been used to seeing in our business, scale will become even more important. So the synergies will include procurement synergies, which will be quite significant. There will also be cost synergies. With two companies merging, we just need one system and so forth. So there’s some clear benefits and synergies there. There are also other top-line synergies. Each company has a bit different way to market and hence, the combination will give us a better footprint across the markets and across the segments going forward. 

What is probably the most important point to understand from a transaction like this is that ALD and LeasePlan are both investing heavily into digital to develop new products and services. In the future, we will only have to develop one system, which provides economies of scale. 

AF: YOU TOUCHED UPON THE MEGATREND OF MOBILITY, WHICH YOU FORESEE AS HAPPENING MUCH QUICKER THAN MANY ANTICIPATE. YOU SEE IN THE NEXT FIVE YEARS, THE WHOLE FLEET AND MOBILITY LANDSCAPE APPEARING DIFFERENT THAN WHAT WE KNOW TODAY. CAN YOU ELABORATE ON THAT FURTHER? 

ALBERTSEN: It’s always difficult to put the exact timing on things, especially when we talk about megatrends. But we have talked about this for the past 10 years. What we are seeing is, first of all, is that the pandemic has clearly changed behavior both with corporates and with consumers. And this is quite clear with some of the new manufacturers, such as Tesla, which has developed a fully digital model to interact with clients. Basically, the vehicle sales process overall is transforming and its true not just for vehicles, but for all types of assets. People do not want to own these assets, they want to have access to them, and it’s coming faster than we have seen with the electrification of cars.

AF: GLOBALLY, THERE ARE TWO COUNTRIES WHERE LEASEPLAN IS PRESENT AND WHERE ALD IS NOT. CONVERSELY, THERE ARE 10 COUNTRIES WHERE ALD IS PRESENT BUT LEASEPLAN IS NOT. WHAT IS YOUR STRATEGY WHERE LEASEPLAN AND ALD ARE PRESENT IN BOTH COUNTRIES, WHICH I BELIEVE REPRESENTS 30 DIFFERENT OPERATIONS?

ALD has always been looking for new opportunities. We opened up in South America. We are just opening up in Southeast Asia. 

Of course, in the countries where we have an overlap, there will be an integration taking place. It’s too early to say how that’s going to happen. There’s a lot of things we cannot discuss at this point until closing. But, of course, this will be done by making sure we create value instead of disruption. So over the next 10 to 12 months, we will basically define exactly how we’re going to do the integration in the countries where we are overlapping. 

ALD HAS HAD A LONG-STANDING GLOBAL ALLIANCE WITH WHEELS, WHICH IS NOW WHEELS-DONLEN. PART OF THE UPCOMING ACQUISITION OF LEASEPLAN, WILL INCLUDE THE ACQUISITION OF ITS U.S. OPERATION, LEASEPLAN USA. HOW CAN YOU ACQUIRE LEASEPLAN USA AND NOT BE COMPETITIVE WITH THE WHEELS-DONLEN RELATIONSHIP? 

ALBERTSEN: I think it’s important to state that at this point, nothing happens. We have a very strong and a strategic partnership with Wheels and have had great cooperation with them for many years. It’s a very strong partnership and we appreciate that partnership. But, honestly, it’s too early for us to say what’s going to happen. 

It’s probably true that you could not see us being a partner with Wheels while being active with LeasePlan in the U.S. So there is a decision to be made. But, at this point, that decision has not been taken and we need more information. It is going to be a serious consideration and it will be done when we have more information than we have at this point.