ALD has laid out ambitious plans to become the third largest contract hire and leasing company in the UK.
The company, currently No8 in the FN50 with a risk fleet size of 47,157 (2009 figures), is targeting the broker market and white label manufacturer contracts as a way to accelerate its growth. It hopes to reach 75,000-80,000 vehicles over the next three years.
“We saw an opportunity in the broker market where others have been exiting,” said Keith Allen, ALD managing director.
“We also want to take more manufacturer schemes alongside out dealer business – we want to be a top three player in the FN50.”
A number of leasing companies have withdrawn from the broker market complaining of poor returns and high risk, but Allen believes the risk is low if the business is well managed.
ALD started to move into the broker sector at the start of the year and is currently upgrading its IT platform to make it easier for third parties to write business.
Access to funding for SMEs and corporate fleets alike remains a major issue in the market, although sensible pricing is back which has improved leasing margins on lending.
“Funding will continue to be a key issue for the next couple of years in the UK,” added Allen.
ALD will add around 10,000 units to its risk fleet this year, with around three-quarters of the growth coming from the SME/broker sector and 25% from its core fleet business. It is sitting on an order bank of 4,000 vehicles compared to 1,500 a year ago – a result of rising activity levels and longer lead times.
“Corporate fleets are starting to re-stock; we can fill a hole in the SME market and still grow our inherent fleet,” Allen said.
He has taken a decision to move away from ALD’s solus supply policy in a “more pragmatic” bid to win more corporate fleet business.
“As an industry we have good retention levels and it is very competitive at the top end,” he says by way of explanation.
“It is hard to pick up new business.”
The growth plan has been sparked by parent company Societe Generale’s ‘Ambition 2015’ strategy.
And while the focus is on organic growth through new and existing routes to market, acquisitions are not ruled out.
Allen forecasts consolidation in the leasing sector, claiming a number of companies – including “two to three minimum out of the top 10” - are looking at an exit strategy.
However, despite some operations being almost openly touted around, he claims there is little appetite from other companies to take on large portfolios.
“There’s a lot that could potentially happen, but no-one is closing a deal,” Allen said.