Fleet News

GE Capital fleet chief lashes UK industry's lack of innovation

A SCATHING attack on the inability of contract hire and leasing companies to launch innovative products has been made by GE Capital Fleet Services' managing director Steve Taylor.

Calling the product vitality of companies operating in the sector 'the worst of any industry I know', Taylor said: 'New business comes from new products and this industry does not sell new products.'

Taylor claimed growth rates had slumped due to the 'one product fits all' syndrome which, he said, most competitor companies offered.

'With leasing companies mostly offering only contract hire as an alternative to outright purchase, there is plenty of opportunity for growth,' said Taylor.

Last year GECFS piloted 'Managed Lease' finance lease and fleet management rolled into one package and has so far signed up 2,000 units of new business. It will spend this year 'aggressively pursuing and marketing' the product.

Finance lease is popular in the America but, as industry figures reveal, is not popular in the UK. Taylor argues that is due to a lack of awareness: 'Finance lease is a wonderful product for some customers in some segments of the market. It is more flexible and cleaner at the back end and helps customers with their cash flow,' he said.

Taylor's interest in finance lease is based on a combination of factors, but particularly the ongoing residual value crisis which is making most leasing companies unprofitable.

'There are only two or three leasing companies including ourselves which are positive in terms of return on equity and no-one is anywhere near where they need to be to run a sustainable business. Most companies are underwater.

'Contract hire will continue to be an important part of our portfolio, but we will not set stupid residual values to win business. We hope to win more contract hire business but we will develop other products in parallel and 'Managed Lease' is one of them.

'Too many companies sell contract hire as a panacea for taking risk away from fleets. But half the market is taking risk so changes in residual values will impact on them. We think those companies will be happy to continue to take the risk but we can help them manage their fleets and that risk better.'

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