GE Capital Fleet Services is aiming for double-digit growth in a slowing European fleet market, as it seeks to win business among the 11 million outright purchase vehicles in Europe.
This target market is roughly equal to the leasing sector in volume terms, effectively doubling the size of the fleet sector in Europe for GECFS. The company says it estimates a total of 21 million company vehicles across the continent.
The fleet finance and management giant claims it outstripped the lease market in 2001 by growing its operating lease business by 11% across Europe in a market just 4% ahead.
And it insists that its six sigma process quality programme, web-enabled products and services, triple-A credit rating, and new European focus will secure further double-digit growth in markets starting to feel the adverse economic effects of last year's September 11 terrorist attacks in the US.
'The reaction from America has kicked in, and we are feeling that everywhere,' said Dan Farrar, president and chief executive officer of GECFS Europe.
'Double digit growth in France, Italy, Spain and Portugal is declining, although the growth is still strong. And core markets like the UK, France and Germany are seeing some tough market environments.'
While competition for conquest business in the European fleet leasing and management markets is intensifying, GECFS has identified huge growth potential among businesses that currently outright purchase their fleets and manage the vehicles themselves.
This sector is worth about the same as the European lease fleet market - and these combine to present $260 billion of market revenue opportunities, says GE.
The company has developed a range of new products to increase its penetration of the relatively untapped outright purchase market that accounts for about 10 to 11 million company vehicles.
For example, it is planning to launch an operating lease product in the Nordic region, and a vehicle maintenance and service product in France.
It has also concluded a deal to offer its fleet services to businesses in Italy via 1,100 banks.
Selling fleet management services to companies determined to own their vehicles, or using its AAA credit rating to lend money to fund vehicles (particularly on finance lease) are both on the agenda.
Following the residual value crisis two years ago, GECFS made clear its preference for non-risk business, such as finance leases, compared to operating leases, and this remains its strategy.
'The residual value risk in European markets is still there, and markets are still softening, but more slowly, said Farrar.
'Where we provide value is in bundling money with service content and if we can do that without residual value risk, so much the better.'
One service ripe for development is the company's consultancy business, which recently helped Canon cut $2 million from its pan-European fleet costs, ironically by switching to an operating lease formula.
'With Canon we baselined its entire fleet and saved it close to $2 million. You cannot ignore those types of savings,' said Farrar.
He attributed the economies in part to the process and quality rigour of GECFS's six sigma programme which it is also introducing to clients, and to GECFS's commitment to 'digitisation', effectively web-enabling its service delivery to eliminate defects and inconsistencies and deliver higher quality data and reports for clients when they want them.
'It's a differentiator, and competitors not doing this will not survive,' said Farrar. 'In the next five to six years customers will not want paper reports.'
Such confidence in GECFS's future follows a difficult two or three years for the company in Europe, a period during which it suffered from the residual value downturn, and lost ground in Europe behind LeasePlan and Arval PHH.
This turnaround at the top of the pan-European fleet lease table seems particularly ironic, given that LeasePlan and Arval PHH both moved ahead through acquisition, while the once grand buyer of businesses, GECFS persisted with organic growth.
For a company with the strategy of being number one or two in every market, and whose global group performance has returned double digit revenue and profit growth for the past two decades, this could have been an uncomfortable position, and GECFS was strongly tipped to be vying with Volkswagen to buy LeasePlan (although Farrar declined to comment on the issue).
But GECFS has significantly strengthened its European focus, following a major corporate restructuring at the end of last year.
This brought together GECFS, commercial vehicle hire specialist TLS, commercial trailer company TIP, and GE's modular space business (which rents and leases mobile offices) into a single European entity called GE European Equipment Management (GEEEM), led by John Bucci.
And in a further significant change, GEEEM will not report directly to GE in the United States, but will be European based, giving it greater 'flexibility and freedom to focus on the things we see as critical in a European environment', said Farrar.
GEEEM aims to propagate best practice between the various partner companies and present a 'single stop solution' for clients' entire transport requirements.
If it can cross-sell more of its products and services to existing TLS, TIP and modular space clients, and start to penetrate the outright purchase fleet sector, then there is every reason to believe that GECFS will maintain its momentum of double-digit growth in Europe.