The Royal Bank of Scotland (RBS) has finally moved to quash speculation surrounding the future of its car and van leasing business Lombard Vehicle Management.
An RBS spokesman said: “RBS is still considering a range of options for Lombard Vehicle Management, but in the interim period it is business as usual.”
Fleet News reported more than a year ago that RBS, which is 84%-owned by UK taxpayers, was willing to listen to offers for the company as part of a programme to sell non-core assets.
But, with GE Capital understood to be close to acquiring the business, Sky News reported that RBS had pulled the plug on talks after failing to agree on the price and structure of a deal.
As a result, it suggested that RBS could now wind down the contract hire company pending the last-minute emergence of another buyer.
However, people working in the industry say they were ‘shocked’ that GE Capital was considering buying the business in the first place.
“It’s such a big gamble,” a source told Fleet News. “I cannot for the life of me see why anybody would want to buy that company.
“Lombard was heavily involved in the broker market and, while there are some good customers in there, there’s also a lot of volatile stuff where it would be difficult to get credit.
“In short, there’s not a lot of business that’s very sustainable so you can see why RBS wants to dispose of it.”
Lombard Vehicle Management had a risk fleet of 81,800 and a number three ranking in last year’s FN50.
But historic data on the UK’s top 50 contract hire companies revealed that its fleet had fallen by 10% – down from 90,468 in 2009 – and it’s believed to have fallen further this year.
A lot of the leasing company’s business is based in the small business sector, which has been hit particularly hard during the downturn. But for those that remain Lombard customers, the speculation is beginning to take its toll.
A customer operating a fleet of 100-plus vehicles, who did not want to be named, told Fleet News he was concerned about the uncertainty.
He said: “We seem to have been left in the dark as to what the future may hold.
“The silence has allowed the rumour mill to go into overdrive, with the suggestion that it was going to run the business down particularly concerning.
“I would have expected it to have kept us informed or offered us some sort of reassurance, but I’ve heard nothing.”
He added: “The day-to-day service we receive from them has been as good as ever. I just don’t know if I should be looking to renew our contract in the future or finding an alternative supplier.”
It’s been a busy year for consolidation in the market, which started with Masterlease getting new owners in January after Investec Capital Markets, part of Investec Bank, stumped up the cash to buy the company, while asking Leasedrive Velo to bring it under its stewardship.
That deal propelled the combined businesses into the top 10 of the UK’s contract hire companies with a total risk fleet in excess of 45,000 vehicles, which was confirmed with the recent rebranding of Leasedrive Velo to Leasedrive (Fleet News, May 26, 2011).
A £569-million deal struck by Alphabet to buy ING Car Lease followed (Fleet News, July 21, 2011).
Assuming no contraction, a merged Alphabet-ING fleet would total 94,791 vehicles, catapulting it to number three in the FN50. It also gives Alphabet a serious presence in the van sector, taking the fleet from 2,321 to 14,448.
However, last year it was GE Capital that had seemed to be in pole position to take over Masterlease, with the company understood to be going through a period of due diligence before losing out to Investec.
More recently the company was also seen as a possible suitor for ING Car Lease, but it was Alphabet that secured the deal.Where GE Capital goes next and whether it can rekindle its interest in Lombard remains to be seen, but further changes to the rankings in the FN50 seem inevitable.
- Completed questionnaires for this year’s FN50 should be submitted by September 2.