Saul Parsonson had seen the writing on the wall.
After four years as managing director of Lombard Vehicle Management, he sensed the bank edging away from contract and leasing towards becoming solely a lender of money. It was time to get out.
Parsonson set up the identically initialled LVM – Logical Vehicle Management – as an intermediary point of contact between fleets and leasing companies. In some cases, the business replaces a fleet department; in others it complements and supports the in-house fleet operation.
That was five years ago. LVM has rapidly built a client base of 400 companies, managing around 7,000 vehicles: 62% are cars, 38% vans.
The smallest customer has just 20 vehicles; the largest has more than 2,000.
“Our typical client has 100-200 vehicles and 80-90% of customers have some form of fleet person within the business,” Parsonson says.
Below 100 vehicles and the relationship is predominantly total outsource; companies do not want to invest in a fleet overhead and hand over full responsibility to LVM.
The business has two core components: outsourced fleet management, accounting for 60%, and vehicle management with intermediary funding (40%) – effectively acting as a broker for smaller fleets.
Peripheral activities include risk management, training and tele-matics (LVM uses ALD’s ProFleet2 system).
“Our main business is complementary to the fleet manager. But there are times when a business decides before we get involved that they don’t want a dedicated fleet team,” says Parsonson.
“We’ve seen an increase in outsourcing from the public sector but in the private sector the trend is broadly flat in the past five years.”
He’s keen not to be seen as a direct challenge to the existence of fleet managers, stressing: “I’m a firm believer that there is a need for a fleet manager as a focal point for all fleets, big and small, especially to control a fleet management company and ensure it is doing the best for the business.
“But outsourcing admin and business services functions allows a fleet manager to do more strategic things.”
LVM has invested heavily in its systems and capabilities, developing software that will pull together management information from all suppliers in a single report.
“Companies have a dilemma between going solus for efficiency and less resource or multi-supplier for a more competitive deal. We come between that and give the best of both worlds,” Parsonson says.
One dimensional leasing
Contract hire and leasing companies have increasingly moved into the fleet management space, expanding their service offering to fleets as they recognise profit opportunities from non-funded activities.