Fleet News

GMAC moves ahead with multi-brand manifesto

Leasing chief Len Clayton explains how one-make captives face a challenging future in Europe

Over the past few decades the term 'car manufacturer' has become an increasingly inaccurate way of describing giants like General Motors, Ford or Volkswagen.

True, they all count car-making as their main reason for being in business, but it's all the other products, services and skills they offer that allow them to be counted among the world's most important industrial corporations.

Included among the huge array of interests a modern car manufacturer may have in its portfolio are new and used dealerships, parts suppliers, fast-fit chains, engineering specialists and new technology companies.

Instead of defining themselves as producers of new cars, manufacturers now use descriptions like 'providers of mobility services' in a bid to compete in as broad a number of markets as possible.

And that means car makers are more interested in the fleet market now than at any time in their history. Through the leasing and daily rental markets, they can begin to control the movement - and the profits - of a vehicle throughout its useful lifetime.

General Motors - the world's biggest car manufacturer - is moving to a new level in its bid to compete in the international fleet market.

The man who is driving much of that growth is Len Clayton, global chief executive for GMAC in all markets outside the USA and Canada. Among his key responsibilities are GMAC's European business to business operation that counts Masterlease in mainland Europe and Interleasing in the UK among its brands.

For Clayton, the backing of such a large company is a huge plus for the leasing operation - but he says GMAC's strategy of moving into all-makes leasing is the most crucial factor in its plans for long-term success in the European fleet market.

'We are very focused on growing as an all-makes service,' he says. 'We can offer everything, from a Mini to a Ferrari, under the Masterlease and Interleasing names.

'In the past most of our European leasing work revolved around Opel, and while we still have a clear strategy for the support of GM, we are rapidly growing the all-makes business. We will also take responsibility for Saab's hire operation in January.'

Clayton says the goal in Europe is to become a true all-brand business within two years. 'At the moment much of the mix is Opel-biased, but within two years it will be impossible to tell through our fleet that we are a GM-owned operation.'

So, for Clayton, the backing and know-how of GM combined with a broad product range provides the strongest structure for a European leasing business. He also says access to GM's strong dealer networks give him 'massive advantages'.

But how does Clayton rank the main competition in the European leasing market? He cites GE and LeasePlan as effective rivals, but says other manufacturers that have stuck to own-brand leasing are inevitably losing out.

There is a close analogy here with the supplier side of the business. Giant component suppliers that were previously restricted to supplying one car-maker are now moving into the all-makes business to remain competitive on a global scale.

'Why limit yourself to a small market sector in which to compete,' he asks. 'Some other manufacturers only offer their own cars in the leasing market. We can now outperform these captives.'

Clayton acknowledges that other manufacturers want a greater role in the all-important fleet market - and they may buy existing leasing companies to move into the all-makes business.

There's intense speculation in the industry, for example, that Volkswagen is looking to buy LeasePlan, the market-leading fleet company apparently up for sale.

But Clayton warns against turning such an operation into a vehicle to promote a manufacturer's own cars.

'Any manufacturer buying into an outfit like LeasePlan would be well advised to leave it alone after the purchase, to let it compete in the market independently. If a parent manufacturer, for example, supplied cars cheaply to a leasing operator, it could be breaking European law.'

And is GMAC interested in LeasePlan? No, says Clayton. It would be the wrong target - both geographically and culturally. But will he look at acquiring other leasing businesses?

'Oh yes. Our strategy is to grow by acquisition in mature markets, and to invest in start-ups in new markets. But we have no intention of moving into every single area just to make sure our footprint's there.

'But we are well down the track in our plans to grow in two key markets - Netherlands and France. But we cannot talk about that at the moment.'

In his position at the helm of such an influential business, Clayton is well placed to judge the growth of the pan-European fleet market. Like many others, he sees no dramatic development of a dominant cross-border trading environment.

'People always think there is going to be a revolution. But that's not the way it works. There's a slow but steady development of a pan-European scene, but very few major global deals.V 'There is however a gradual emergence of a pan-European product - a product that goes across borders where the same general conditions exist in each country. But this will never be a majority of our portfolio.

'It's a nice incremental bonus - in Germany, for example, our business may be 75% German, and 25% may have pan-European connotations.'

Clayton says much of the European market is still clustered round small deals - say, of 40 cars. 'You have to adjust your strategy for each country. It would be foolish to impose the same strategy across Europe.'

So, within this market, what are the fleet industry's main challenges?

'We have to ensure people continue to run company cars instead of taking a cash option,' he says. 'But this is easier rather than harder. The company car is proving to be a stubbornly enduring thing.

'We must continue to offer full service leasing to offer customers a broad range of services. Customers want the sort of advice that we can provide with our extensive data.

'They want advice on things like CO2 emissions, on different leasing products. This full service allows them to really outsource the business - now this is more important than the old fleet products, and is growing rapidly in Europe.'

Working as a fast-moving, highly competitive, autonomous company within the umbrella of a global giant is how Clayton sees GM's leasing subsidiary. And while other types of leasing operation will also reap success in Europe, he's clear on what it will take to survive the next few years.

'The slower leasing companies that cannot offer a full service will simply evaporate. The bigger and better ones will use data, information technology and the internet to provide a much more complex leasing service that proves they can bring costs down.

We will become much more integrated with our customers. Overall, the winners will be the innovators.' (October 2001)

 

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