Fleet News

GECFS prepares for e-commerce challenge

THE world is moving on to the web, and pan-European fleet suppliers that fail to grasp the internet nettle will be left behind. Daniel Farrar, president and chief executive officer of GE Capital Fleet Services Europe, considers e-commerce and e-business as central to his company's future, presenting both defensive challenges and competitive opportunities.

He believes a comprehensive e-business strategy is vital for future success in Europe, securing the loyalty of existing customers and opening the door to new customers and opportunities that are currently beyond reach.

'E-business is moving so fast and we need to find a way to offer to our installed customer base the benefits, speed, flavour and excitement of e-business,' said Farrar.

'Order to quotation, fleet management, and defleet are processes we do today that we could e-process. It all comes down to the technical equation and our fulfilment capability.'

If such a strategy is essentially defensive in outlook, e-business activities and transactions also afford suppliers the opportunity to go on the offensive and target new clients, particularly among the hi-tech IT and telecommunications industries - the fastest growing area of European economies.

'We can create a value proposition over the web for new companies that do not want to talk to a salesman, that are more e-savvy, and that are happy to conduct everything online,' said Farrar.

He outlined a three-stage chronology for developing e-commerce within the European fleet industry, starting with a quote-to-order system that allows customers to compare vehicle prices and lease rates, and specify and order new vehicles over the web, with no human intervention.

This will be followed by suppliers giving their customers the freedom to access and structure information on their vehicles in a real time environment.

And the third stage applies to defleet procedures for end-of-contract vehicles in recognition of the efficiency that e-technologies can bring to remarketing channels.

'E-business will allow suppliers the opportunity to change their value proposition in a huge way, and will make us more responsive to CTQs (critical to quality issues) by sharing information with customers in real time,' said Farrar.

He identified the principal advantage for customers as their ability to manipulate their fleet data in whichever way they choose, rather than pick from a one-size-fits-all menu of reports, thanks to GECFS's commitment to a relational database strategy.

This gives fleet decision-makers the opportunity to identify and analyse trends within their own operations, and to confirm their conclusions by benchmarking their findings against the wider pool of GECFS's fleet on a national or even international basis.

GECFS itself has adopted a clear international outlook for its own European operation, practising what it preaches by centralising its purchasing and product development divisions.

'Spending $2.5 billion a year on new cars across Europe, we saw an opportunity to co-ordinate our sourcing more effectively, and with a greater voice from our European centre by centralising our purchasing function,' said Farrar.

'It is a question of understanding how much we spend and where we spend it, so that we could negotiate the best terms, and let our customers benefit in terms of productivity and competitiveness.'

This has involved different strategies for different suppliers, with Farrar distinguishing between vehicle manufacturers and aftermarket product and service providers such as tyre companies, car hire operators and roadside recovery and assistance organisations.

Among the former category, GECFS has opened communication lines with vehicle manufacturers' central European offices, negotiating rebates based on its total pan-European spend, and seeking additional support to help influence customer decision-making.

On the aftermarket side, however, products and services can differ from country to country, so GECFS has adopted a dual approach of consolidating its buying power where possible, but also dealing with local market leaders where this means a better quality of service for its customers.

But having acquired Netherlands-based ARO Lease - the company known throughout Europe for winning a European Court of Justice case that allowed it to operate a tax advantageous cross-border leasing scheme - Farrar played down both GECFS's interest in rolling this out to more customers, and the short term impact of the Euro.

'You can realise 6%–8% savings by buying and selling vehicles cross-border, but those savings may disappear with warranty and customer service issues,' he said. 'The Euro will create some price transparency, but until you have tax harmonisation the industry value chain will not appreciate its full value.'

Similar obstacles obstruct the creation of a single portfolio of pan-European products, although GECFS has centralised its e-business and product management division under director Hamid Khoudi.

Once again, the centralisation aims to ensure that the company gains maximum leverage from its pan-European spend, this time in IT and systems - the central elements of so many new products.

This centralisation gives GECFS a central overview of all IT development so that resources are prioritised for the most appropriate and time-critical areas.

Farrar confirmed that this did sometimes involve some 'tough calls' as GECFS national operations competed for funding for local developments, but said national general managers had all participated in the architecture of the 'European mosaic' - the blueprint of the company's future strategy.

And he insisted that GECFS recognised the importance of local content and service to local customers, saying that the company remained very aware that 'every pan-European agreement has local requirements about which we need to be sensitive'.

'We have 30,000 to 33,000 customers across Europe and we need to be thinking about what our customers are defining as the information and services they want to manage their fleets, and then provide them with productive solutions,' he concluded.

European fleet size set to grow

GE Capital Fleet Services is looking for substantial growth in its European fleet size, driven by rapidly developing countries.

The leasing and fleet management company is enjoying tremendous growth in fledgling markets such as Italy, Spain and Portugal, and forecasts that it will increase its pan-European fleet to more than 475,000 vehicles within two years, from its current 385,000-vehicle threshold.

Across Europe, GECFS estimates a total parc of 176 million vehicles, of which 15 million are company cars, including 3.5 million on operating leases.

'The total car parc is growing at about 1.5% per year, below European GNP, but the company car element is growing at 2.2% per year in line with GNP, while operating leasing is growing at about 6.4% per year,' said Daniel Farrar, president and chief executive officer of GE Capital Fleet Services Europe.

This pan-European figure masks local hotspots, with GECFS forecasting that the vehicle leasing business in Italy will increase by 31% per year, in Spain by up to 27%, and in Portugal at an even faster rate.

The boom areas of southern Europe are central to GECFS's future plans, but it is already looking wider afield into Eastern Europe and a strategy that includes local partnerships rather than solely acquisitions.

'Our strategy is to go into areas where there is great growth opportunity, and that could be in partnership, perhaps with GE Capital sister companies such as Global Consumer Finance, to offer a combined package of leasing and fleet services,' said Farrar.

Fact file

  • GE Capital Fleet Services was founded in the United States in 1987
  • GECFS entered Europe with the acquisition of Avis Fleet Services in 1992
  • The company now has operations in Belgium, France, Germany, Finland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK
  • GECFS also has affiliate arrangements in Austria, Bulgaria, Czech Republic, Denmark, Greece, Hungary, Ireland, Israel, Poland, Romania, Russia, Turkey and CIS member states
  • GECFS employs 1,600 people in Europe
  • GECFS operates a pan-European fleet of 385,000 vehicles, and has more than one million cars and trucks under lease and management worldwide. (April 2000)
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