Fleet News

Alphabet prepares for major European expansion

ALPHABET, BMW Financial Services' multi-marque leasing company, is planning a major European expansion through acquisition and organic growth.

The company plans to build on its three existing operations in Germany, Switzerland and the UK by launching in Austria, Italy and the Netherlands this year, and Belgium, Denmark, France, Portugal, Spain and Sweden next year.

The company can build on BMW Financial Services' European infrastructure, but Petra Kerp, chief executive of Alphabet Europe, also wants to buy local fleet market knowledge.

'Sometimes it's too cumbersome to set up companies from scratch, so in countries where we have no representation we want to buy smaller firms and restructure them according to Alphabet's corporate identity and procedures,' she said.

Her vision is to differentiate Alphabet by positioning it as a new hi-tech company in the congested and consolidating European leasing market.

'We are a young company so we have no legacy systems issues. I want to set up Alphabet as a fleet management company based on e-commerce, linking our customers and suppliers via e-commerce to make it easier for them to do business with us,' she said.

A major procurement initiative is already under way in tandem with BMW's procurement department to identify web-enabled potential suppliers. Kerp believes business-to-business e-commerce still has much to deliver to the efficiency of fleet leasing and management solutions, and that Alphabet can position itself as the virtual gateway for customers - bundling products and services to suit customer needs.

'We need to classify our current suppliers and see which can deal with us and our customers via e-commerce, and I want it all in place by 2001,' she said.

The development of Alphabet reflects the ambition of BMW Financial Services to increase its share of retail finance; increase its banking facilities for lending to dealers; and develop its multi-marque fleet business.

This signals a significant change for BMW the manufacturer, whose engineering pedigree and outlook has left it slow to capitalise on revenue streams beyond the sale of a vehicle.

'Right now BMW only has one slice of the cake from the initial sale of the car, and we want to take a greater part of the value chain,' said Kerp.

'There are far more opportunities to bond with a customer and make profits, such as finance and insurance.'

The development of a multi-marque operation also represents a certain modesty at BMW to accept that not every customer wants to supply its entire workforce with BMWs - particularly outside Germany, where BMW products tend strongly to be prestige cars for senior staff.

And just as national car markets have different tastes and preferences, national leasing and fleet management markets also require locally-focused products. To satisfy these local requirements while developing a pan-European feel to Alphabet's service, Kerp wants to develop a modular product portfolio that allows fleets to select the services they require.

This portfolio will include leasing, fleet management and insurance modules, as well as personal finance products offered to fleet drivers as an alternative to the company car, or to staff who do not qualify for one. Alphabet has already recorded considerable success with this type of product in the UK with companies like Marconi and British Aerospace.

Kerp also wants to acquire off-the-shelf IT packages developed in local markets but linked by an umbrella system for management information and reporting, especially for international fleets. 'We are receiving more and more requests for European quotes and European fleet management, although it's still less than 5% of our customers,' she said.

'What we see happening is large customers with headquarters in the United States want a European deal, and will not talk to any companies that cannot supply them. This is happening more and more.' (August 2000)

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