Rewind a year to September 2011. David Bowen, the newly-appointed managing director of BT Fleet, has outlined to Fleet News his ambitious plans to grow revenue by £20 million over the next two years, taking the fleet management business to £75 million.
And a key part of his future strategy is a move into fleet funding for the first time.
An asset finance deal has already been struck with a major FN50 leasing company and, within a year, company executives promised BT Fleet would itself feature strongly in the list of leading contract hire and leasing companies.
So, one year on, how is the company living up to its growth and expansion aspirations?
Fleet management business is up 9% year-on-year, from 33,000 to 36,000 vehicles, with double-digit growth expected this year. Turnover of £75 million is very much on schedule.
BT Fleet has added almost 50 customers to its external account after partnering with a number of small niche fleet management companies to win business in the SME sector.
And what of the plans to become a major FN50 funder?
BT Fleet has signed a “couple of small customers”, according to Bowen.
Then he makes a surprising and frank admission: “The partnership gives us an opportunity to offer funding but if we didn’t have one now, I wouldn’t be worried. It’s not necessary to our success.”
This U-turn is based on one unforeseen development: fleets are looking to unbundle the relationships they have with contract hire companies.
Tenders are being split into core components, such as service, maintenance and repair (SMR), car hire, breakdown recovery and accident management.
“Contract hire is now part of our armoury but the market is segregating,” says Bowen. “Fleets no longer want finance, SMR and management bundled together; they want them separated out so they can understand the profits better.
“It’s about driving value in each sector. We have seen this with fleets inside the top 10, but also in the mid-market of 500 to 1,000 vehicles, and even below that.”
Finance directors are behind this change in attitude, according to BT Fleet’s own finance director, Andrew Edginton.
Their agendas have changed: they now have greater focus on deriving more value from business relationships. And they are challenging their fleet managers to save cost.
“Fleet is non-core to a lot of businesses so the finance directors have looked elsewhere to reduce cost,” Edginton says.
“Now they have got to fleet and they want to know what underlies the monthly bill.”
Bowen adds: “When companies outsource they are transferring profit out of the business because they are outsourcing the decision-making process – there’s no transparency.
"Finance directors have spotted that trick; they want to understand how to take cost out and save money from outsourcing.”
The provision of management information, geared to the individual needs of the customer, has been a key change in client relationships.
Finance directors are demanding it and poring over the figures with their business analysts.
“Our new and existing customers are more interested in fleet activities,” says Edginton.