Fleet News

Investment costs test the commitment of suppliers

THE substantial investment required to develop pan-European full service leasing operations is testing the commitment of major industry players.

The creation of an integrated pan-European network is vital if suppliers are to serve the growing number of companies that see Europe as a single market and consequently want a single product offering to cover all their fleet needs. But suppliers face the uncomfortable truth that such developments require considerable financial and staff resources.

Speaking exclusively to Fleet News Europe, Georg Bauer, member of the DaimlerChrysler Services (debis) Board of Management responsible for financial services in Europe, Latin America, Africa and Asia/Pacific, believes that some banks are reconsidering their shareholding in leasing and fleet management companies, following corporate decisions to refocus on their core business.

He argued that leasing and fleet management firms with direct links to motor manufacturers have a much greater affiliation with the fleet sector.

'When it comes to developing competitive new programmes, car-related companies will have a competitive edge over the next two to three years, ' he said.

Manufacturer-backed companies will, however, have to swallow their pride and adopt a multi-marque stance to serve the European market - even those with a range as diverse as DaimlerChrysler's smart to S-class line-up.

'We have to put on the customer's hat and see what is most efficient to them, not what benefits our group,' said Bauer.

'We will not hide our product line that has an excellent price-value offer, but as a consultant - and that is a very important point - you have to take the customer's point of view.'

He forecast that more than 20% of European fleet business will be conducted on a pan-European basis within the next three to five years, highlighting the importance of an international product and service offering.

'Companies are going to have to realise that if you want to play in the pan-European market you will need a shareholder to put you in that market,' said Bauer.

He believes this will be the catalyst for market consolidation, and cited the investment that DaimlerChrysler has already made in debis CFM through acquisition and new ventures as evidence that debis CFM is in the market for the long term.

And he added that companies without such resources will find themselves increasingly victim to takeovers, amid rapid industry consolidation, providing opportunities for debis CFM to reinforce its commitment to pan-European fleet management via a two-pronged strategy of organic growth and targeted acquisitions.

'We consider fleet management as one of our top growth markets,' said Bauer. 'We have made an acquisition in the UK (Masterdrive Leasing & Rental - 1999) and that is just the beginning. In Germany we are moving ahead at significant speed to become number two in the market, and we have founded some new companies in Italy, Spain and France.

'While we do not have fleet management companies in 18 European markets, we do have leasing companies in them so we can build on the strength of a European platform to give us a push with fleet management.'

His optimism is based on the relative under-representation of fleet management services in Europe's less mature company car markets.

In Germany, for instance, Bauer said only 17% of the company car parc was 'under third party management', compared to almost half in developed markets such as the Netherlands or UK, and debis CFM recently won the contract to manage Siemens' 7,000-strong fleet in Germany, taking over the management of the vehicles immediately, and replacing vehicles when they come up for renewal with leased cars and vans. (April 2000)

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