As sales patches go, Len Clayton, global chief executive, full service leasing for GMAC, the financial services arm of General Motors, has a pretty large area to cover.
Clayton is in charge of the firm's leasing resources in 10 European countries, Australia and Mexico, under the Interleasing and Masterlease brands. As a result, he knows the global fleet industry inside out: where business is being done and where it will be found in the future.
Amid claims the UK market for full leasing services is flat, it is important for operators to find new opportunities.
Clayton said: 'In Europe there are a number of traditional markets: France Germany, Italy, the Netherlands, Belgium and Spain but the major traditional markets are all mature, although most are growing quicker than the UK. There are huge areas for growth and leasing companies which feel comfortable only in Britain and Western Europe are missing out. In the UK, margins are slender at 1-2% return on assets, while in many other countries a 5% return on assets after tax is the norm.'
So while western Europe is saturated, GMAC has looked to Poland and the other ambitious European nations born out of the extinct Eastern Bloc.
Clayton said: 'Poland is a new emerging market for us and is the fastest growing market in Eastern Europe. It is also a springboard into the Czech Republic and Hungary when they join the EU in two or three years' time. The potential there will be enormous.
'Poland is the fastest growing market in Europe because it is likely to gain from joining the Euro Zone and there is wide acceptance for joining the Euro: around 75% of Polish people are in favour if it. They have adopted a western style of capitalism.
'The company car market in Poland is around 300,000-350,000 in a total market size of 600,000-700,000 vehicles. There are many divisions and departments of major western companies in Poland, which works for us because they share similar business practices.
'The leasing growth rate is huge. Polish businesses are now using leasing for vehicles because they want to use their capital to help advance across Europe, rather than have it tied up in cars. It makes it a fantastic market for us, because there are few western companies there.
'The Czech Republic and Hungary are a bit slower and in smaller European countries we would probably have a cluster operation, because it is not viable to have a business in each of those countries.'
How can a leasing company extend into a number of different countries without incurring huge costs and inefficiencies? Clayton reckons it comes down to centralisation and pan-continental systems.
He said: 'I believe that to operate across a number of countries you need streamlined centralised management reporting. This is something only the bigger companies can do. To do that you have to have information technology systems in place through a single provider, which has the ability to link communications, accounts and centralised management reporting, and not many companies could do that – it tends to cut out the smaller operators.
'In the international trading jigsaw, with different languages, business practices and currencies, it tends to make life a lot simpler.'
According to Clayton, the ability to offer pan-European or global services means leasing firms can centralise car provision and policy standards for clients. It also means centralised negotiations and fleet policies such as lengths of contract can be put together for a block of nations, so that, for example, leasing firms are not providing six month leases in Italy, and six years in Spain for the same clients.
He added: 'To go global, you need strong web-based systems so you can set up quickly and at low costs, and by being linked individual businesses in each market are not incurring extra cost by replicating the existing management structure.'
Outside of Europe, GMAC has a large operation in Australia under the Interleasing brand. It has 19,000 vehicles in a fleet market of around 350,000 company cars in a total vehicle market of 800,000 vehicles. To run a fleet in a country the size of Australia causes its own problems though.
Clayton said: 'Australia is too far away from our European operation and so has to run on its own. And because it is such a big country and the cities are so spread apart, you have to have a really powerful system in place otherwise you would find that it becomes a number of locally-based companies.'
GMAC also operates in Mexico, which it believes will be a springboard to rest of South America.
'We kicked off in Mexico about 18 months ago and have 2,000 vehicles there,' said Clayton. 'Profitability is excellent in Mexico because there is an expectation there that you pay for services and the residual market is excellent, although the North American Free Trade Arrangement may change that over the next couple of years.
Mexicans will be able to go across the border into the USA to buy cars.
'At the moment there is a big market for cars of all ages and conditions, from eight-year-old bangers to good ex-company cars. Fleets in Mexico tend to comprise of small cars and Fiat does particularly well. It's not a mature market.
'There are 200,000 corporate vehicles in Mexico with one million retail sales a year, and as there are many European companies in Poland, there are many US companies in Mexico. As a result, Mexico is leading the charge in South America, with the next market Brazil, although this is about a decade behind.'
But where to next for the fleet leasing business? Clayton reckons all signs point to China.
'China will be a monster of a market and GMAC has made a major investment there. It's a country that will soon be making a lot of US cars on production lines and when the Chinese do something, they do it in a very big way. When it really starts to grow, the Chinese market will make the US market look timid. There is already a lot of interest in leasing and we need to examine it in greater depth because the characteristics will be different – the corporate car market is not the same, disposals are not the same, there is the issue of licensing and how much the government is involved. The Chinese are amazing people: their energy and capacity for change is astonishing.
'The next 10 to 20 years will see extensive growth and the bigger leasing companies could do it, but they will have to overcome obstacles and cultural differences that go beyond just bows and handshakes. For example, the government feels that the selling of used cars has to be fair for the buyer – there will be no unshackled buying or selling of used cars and we have to look at ways and means of working in that context.'
Another less spectacular but potentially profitable area will be India, with the expanding call centre workforce of the past few years and the IT world increasingly based there.
Clayton said: 'India is a market waiting to happen. The good staff combined with low wages will not last forever, but the Indians have a western business model through the cultural association with the UK. British firms feel comfortable there and many of the same systems are in place, although for a company such as GMAC, we would probably have to run an Asian cluster including India, China and other countries in the area.'
Despite the number of nations whose fleet industries have potential for growth, all come associated with risk and leasing firms have to weigh up the pros and cons. According to Clayton, countries such as China and India are a modest risk, whereas many companies would not go anywhere near Russia for example, because of endemic criminal activity.
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