Mercedes-Benz has become the latest manufacturer to offer rival products through its leasing arm in an effort to achieve growth.

Mercedes-Benz Financial Services (MBFS) has struck a deal with Leasedrive, which will allow it to target customers who want a wider variety of brands but still value a direct relationship with the premium manufacturer.

“This partnership means we can support a wider range of customers,” said an MBFS spokesman.

“Mercedes-Benz can provide vehicles that meet every fleet requirement, but we do recognise that some customers may have a specialist requirement for other vehicles.”

In addition to making the brand more flexible for customers, the strategic shift will also open up the potential for solus contracts with large fleet customers which operate a wide range of brands.

Other manufacturers that have successfully exploited this strategy include BMW through its Alphabet multi-marque leasing brand. VW Group has also enjoyed success through its investment in LeasePlan.

Both leasing giants operate more than 100,000 vehicles and sit at second and third in the 2012 FN50, with 134,000 and 109,000 funded vehicles respectively.

Toyota Financial Services to offer multi-brand funding

Meanwhile, Toyota Financial Services (TFS) has also paved the way for a rapid expansion of its risk fleet with the development of a multi-brand funding product.

The company, which is 25th in the FN50 with a risk fleet of 6,316 vehicles, currently provides funding only for Toyota and Lexus models, but is launching Multi-Mart in the coming months. This will see it offer funding for a multi-brand fleet, providing at least one of those vehicles is a Toyota or Lexus.

MBFS was listed seventh in the FN50 with 55,000 vehicles. Despite the multi-brand offering, MBFS still expects its premium offering to dominate as it prepares for substantial product and sales growth.

This was identified as a key reason for the appointment of Leasedrive. When the contract goes live in the autumn, Leasedrive will effectively be a supplier to MBFS, offering fleet management services, quote, order, delivery and disposal services. It will also take the residual value risk on non-Mercedes-Benz vehicles. MBFS takes the risk and reward of funding its own brand cars and vans.

Mercedes-Benz will be able to use the resources of Leasedrive to cope with the expected numbers of enquiries and orders as the range expands, with sales building for the new A-Class along with the arrival of other models.

Bob Middleton will remain managing director of MBFS, while Leasedrive will also report into the fleet department, led by Nick Andrews, head of fleet sales.

Andrews said: “We have ambitious plans for the future, supported by the strongest range of products we’ve ever had. Mercedes-Benz is already the fastest-growing premium manufacturer in the UK and now my team is focused on allowing it to become the number one premium fleet manufacturer in the UK.”

For Leasedrive, the partnership for growth is one of its most ambitious expansion projects yet, as MBFS currently dwarfs its new supplier, despite expansion at Leasedrive.

Leasedrive fleet almost doubles in size

Leasedrive currently funds 23,000 vehicles, with a further 11,000 under management – 34,000 in total.

Three years ago, Leasedrive’s combined fleet figure was just under 18,000 vehicles, but it then took on responsibility for running Investec-owned Masterlease.

The two leasing operations have now been fully integrated, with the majority of Masterlease’s SME and white label business run off, mostly to brokers.

Leasedrive identified around 70 customers it wanted to retain, which accounted for around half of Masterlease’s risk fleet volume. All have moved across.

David Bird, Leasedrive chief executive, said: “We had to demonstrate to them we could be competitive on price and not only continue the service levels but improve upon them.”

The growth trajectory has been reflected in Leasedrive’s profits, which have risen from £5 million (earnings before interest, tax and amortisation) in 2010 to £14m in 2012, itself a £4m year-on-year increase. Masterlease contributed much of the recent growth.

Following the latest announcement, Leasedrive’s future growth is seemingly assured as it supports MBFS in its ambition to meet the expected demand for its growing own-brand portfolio in years to come.