Lombard Vehicle Management (LVM) has wound down its contract hire and leasing business earlier than expected with the sale of 9,000 cars and LCVs to Hitachi Capital Vehicle Solutions for an undisclosed sum.
The sale of the vehicles, which are operated by around 3,000 businesses, comes after the Royal Bank of Scotland (RBS) owned business announced it was pulling out of the vehicle leasing sector last year after failing to find a buyer for LVM.
RBS had declared it a ‘non-core’ business as it looked to ‘de-risk’ its operations in light of the banking sector crisis.
Instead, it entered into an arrangement with ALD Auto-motive to provide a white labelled outsourced service to existing and new customers, called Lombard Vehicle Solutions (LVS). The business is currently understood to have around 7,500 vehicles on its books with a three-year growth plan to reach 30,000 cars and vans.
Hitachi Capital chief executive Simon Oliphant said: “We already had a good relationship with Lombard Vehicle Management and RBS so when they decided to sell the portfolio we were contacted.
“Our four-year plan is for continued organic growth and acquisition. We have not been strong or active in the SME sector, but we wanted to enter that market.
“Lombard came along and that has provided a great opportunity to accelerate growth.”
Last year’s FN50 quoted LVM’s risk fleet at 49,884 vehicles, but with contracts coming to an end and fleets switching to other providers, its risk fleet has fallen dramatically.
A handful of larger fleets remain on the LVM books, but arrangements are in hand for those organisations to migrate elsewhere in the near future.
Then the lights will finally be turned out at the Birmingham offices of LVM where the original workforce of 400 people has reduced to about 100. It is expected that most of those left will be redeployed within the RBS Group.
In February last year LVM, which at the time operated a 58,000-vehicle fleet, said it anticipated that the ‘orderly wind down’ of its book would take two to three years.
However, Ian Isaac, managing director, Lombard Business and Commercial, told Fleet News: “The ambition within the vehicle management business was to get the doors shut as quickly as possible without disrupting service to customers.
“The option was to let agreements run their course into 2014 and perhaps beyond or dispose of vehicles and close down the business as quickly as possible, and faster than expected.
“We have placed some vehicles with Lombard Vehicle Solutions (LVS), but Hitachi Capital has picked up the rump of the remaining portfolio.”
Commenting on the launch and growth aspirations of LVS, Isaac said: “The new Lombard relationship with ALD Auto-motive is working well and long term Lombard Vehicle Solutions is seen as capable of growing to a fleet of 30,000 units. The new delivery volume target for 2013 is on track.”
LVM customers were informed of the sale to Hitachi Capital by letter at the end March – just days before the acquisition was completed on April 2.
Oliphant added: “We followed up Lombard’s letter with our communications and our aim is to make the transition as positive as we can.
“We are understanding what those customers requirements are and we will then deliver through excellent customer service. We are fully geared up and resourced.”
Hitachi Capital currently operates 73,000 vehicles on behalf of some of UK’s most high-profile business critical fleets and takes the residual value risk on more than 50,000 of those.
The business has recorded fleet growth of 40% in the past year and says it has made a significant investment in people – now with more than 300 employees – and systems.
Looking to the future, further expansion at Hitachi Capital can be expected. Oliphant said: “We are committed to the fleet market and I want the business to grow.
“We are targeting good growth over the next four years as we always have done. Our parent company wants 7-8% a year targeted growth across the group which we try and achieve depending on market conditions.”