Fleet News

LeasePlan steams ahead despite takeover rumours

Six months after landing one of the most important jobs in the leasing business, LeasePlan International managing director Nick Salkeld is under no illusions about what it takes to be a major pan-European fleet player.

It's not enough merely to be present in all the major markets, nor is it enough to offer standardised products and prices across the continent.

It's not sufficient to create an IT network that allows all the offices in the company's network to communicate with each other. Similarly, it's insufficient to merely amass as much market data as possible to minimise the risk in what is fundamentally a risk-taking business.

All these elements are, of course, vital to success. But the key, says Salkeld, is to incorporate them all into one seamless whole - and only then can you start competing in what is a young, developing market where everyone is learning.

'There's no doubt you have to be committed to survive in the pan-European fleet market,' says Salkeld.

'We started by finding out what customers wanted from an international programme, and then by asking ourselves if our structure fitted those needs. At the end of last year a new regional structure for the group was created.'

This divided the company into four regions - Northern, Central and Southern Europe and the United States. These international offices also work closely with LeasePlan's 26 local operations to identify and develop European and global fleet opportunities.

'This structure meant we could deliver centralised accounting management and standardisation across Europe while making sure we were able to deal with customers locally,' says Salkeld.

'Each region has its own structure - with business development managers and sales and marketing managers. We can deliver harmonised prices and products across the EU, and we can negotiate on a European level on behalf of local clients. This was the empowerment customers wanted.'

The new structure helped LeasePlan increase its global fleet by 23% last year.

Salkeld was previously group commercial director of LeasePlan UK. He replaced Francois Boulard on March 1 at the international arm.

The restructuring was finalised under the management of LeasePlan Group's senior vice-president, business development, Guido Schouteet.

'Although the process was finished in the third quarter of last year, it was the result of an international organisation that has evolved over 10 years,' he said.

'The biggest challenge is getting countries to work alongside each other, and to deliver locally. We have to have a perfect link between LeasePlan International and local operations.

'This is a challenge - not an obstacle. It looks easy to convince people of globalisation - but it isn't. But once local offices are convinced that globalisation is an important objective, then it becomes easier - and we are now past that stage.'

LeasePlan International employs about 40 staff, liaising with 26 local operations around the group. Its worldwide fleet is more than 1.2 million vehicles.

'It helps that we have wholly-owned subsidiaries, rather than alliances,' says Salkeld. 'The business structure would be very difficult with alliances. Our subsidiaries are owned by us. All have the same marketing database, IT platforms and linkage, and management reporting systems. All this leads to major efficiencies.

'We created a regional structure within group so we can deliver centralised accounting management. We want to be where customers are.'

'This business is different from country to country. Car-makers are still not very interested in global deals. So most deals are done locally. We have all the knowledge to go ahead with global deals.

'But this ability to deal globally has not improved the level of discounts. Car maker margins are not higher, and they are not offering easy discounts to fleets.

You really have to fight for discounts, and it's not an easy fight. You have two forces going in different directions. The whole operational business is in local countries.

'We are hoping this will change with block exemption . We have shown decisive action by being involved in discussions. We would like normal free market rules to be valid for the auto sector.

'Car makers see us as an intermediary, but we want to be seen as a final customer in a normal competitive environment. Our arguments were apparently well accepted by the authorities debating changes to block exemption.'

But if leasing companies are struggling to win big discounts from car makers, can they offer their own customers better value for money?

Yes, says Salkeld. 'We can take best practice from certain countries to really demonstrate how you can save customers money elsewhere. The customer must work alongside you to realise savings. It really is a partnership - we have to work long term with clients.

'You find that different types of customer have different cultures. You may find that some sectors may be committed to globalisation - for example, pharmaceutical companies. They make small margins in certain business areas - so they have to be international to realise efficiencies of scale.

'We will focus on sectors where we have a receptive audience - for example someone who is about to enter a global programme, and those who are thinking globally. But this does not always manifest itself in fleet - it maybe in some other area.

'The way in which globalisation is tackled is very important. There must be the drive and willingness to do it, with a dedicated team. But sometimes companies talk about this and then the idea disappears. These guys need our support to guide them through the process.'

LeasePlan International is committed to organic growth and acquisitions - but, as most people in the fleet market suspect the business is likely to be sold by parent company ABN AMRO Group before too long.

Potential buyers at the moment are Volkswagen, and US major GE Capital.

Neither Salkeld or Schouteet will talk about the sale - but both agree all they can do is press ahead with their normal business, making sure it's in as strong as position as possible. What's certain is the new owner will get a fleet business that is as committed to globalisation as any in the industry. (October 2001)

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