ONE of the biggest brands in the motor industry entered the contract hire market with the launch of AA Vehicle Management yesterday.

The new company will initially offer contract hire and personal leasing, targeted at AA Business Services' current customer base, as part of its bid to broaden the motoring-related services it offers to business.

AA Vehicle Management will act as a broker, passing day-to-day contact, management and funding of contracts to its partner, Bank of Scotland Vehicle Management, part of HBOS, which also owns half of Lex Vehicle Leasing. Fleet NewsNet revealed in January that the AA division was considering a vehicle leasing service for fleets (Fleet NewsNet January 24).

Using its buying power as part of the AA brand, which covers 50,000 business customers, AA Vehicle Management is targeting the small fleet sector, mainly between 25 and 50 vehicles, although sub-25 fleets are included, and offering them leasing rates normally reserved for larger fleets.

Saul Parsonson, general manager of strategic partnerships and ARC, said: 'Through our partner, we can offer everything, from sourcing the vehicles through to financing, managing and disposing of them at the end of the contract.

'Furthermore, because of the size of our potential customer base, we have buying power on a huge scale. This is part of the overall AA service, so it is a classic single point of contact. For example, if you are buying roadside breakdown cover, it is highly likely you will be interested in other services we can offer.

'And the AA brand brings a level of honesty and integrity to the proposition, showing that we don't necessarily want to push the client into leasing, as we don't need to sell it to them.'

He added: 'It is simply part of a consultative approach offering a wide variety of services to the customer.'

The firm has set 'modest' sales targets for its first few years, thought to be about 7,000 units over five years.

The launch sets the scene for a range of other potential products that could enhance the business offering from the AA, such as fuel cards, and AA Business Services says every potential area is being examined.

The AA has already launched a vehicle sourcing and personal leasing operation as part of a continuing expansion of its 'motoring essentials' strategy.

Bosses at the firm are asking fleets to 'think again' about the services that the AA can offer as part of its latest move towards a 'cradle to grave' product portfolio for fleets.