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BC50 - TOP 50 LEASING COMPANIES: Who's leading the leasing pack?

Date: 18 October 2010

BusinessCar's annual snapshot of the state of the leasing industry plots the rise and fall of the biggest 50 firms in the business. Rachel Burgess reveals who's moved up and who's slipped down the table in 2010.

When BusinessCar expanded its chart of the UK's top leasing firms from the largest 25 to 50 last year, the merger of Lex and Autolease - a union that dwarfed its rivals - was a relatively new development.

It's not surprising, then, that the firm is still topping the chart, operating a fleet of more than double the company in second place, Leaseplan, which has 123,882 vehicles compared with 307,133. However, as the newly formed company declared at the time, it has continued to decrease numbers to focus on more profitable areas (see 'Lex Autolease continues to cut back on numbers', below), reducing its fleet by 9%, or 30,645 vehicles.

The top 10, in terms of the names of the companies that comprise that list, remains mostly unchanged, while despite it being a tumultuous year there is no obvious pattern regarding the decline or growth in leased vehicles.

ALD Automotive has made the biggest gains, growing its on-risk vehicles (the number of cars for which it carries the RV risk) by 20%, taking it to fifth place from 2009's eighth. A spokesman says following a strategic review late last year, ALD embarked on a growth strategy focused on developing third-party sales channels through both manufacturer white label schemes and the development of a broker channel. It says it has also continued to develop direct corporate sales business through continued investment in innovative fleet solutions.

"During 2010 the white label leasing schemes of Vauxhall, Saab, Chevrolet and Kia have contributed around 50% of the growth," the spokesman explains. "The balance of fleet growth has been generated from our third-party sales channels with a new broker division together with a 20% increase in our corporate direct sales business volumes during the current year." The firm envisages funded fleet growth of more than 15% in 2011.

While ALD has demonstrated success in the leasing arena this year, the demise of Masterlease continues, tumbling from ninth place to 12th. The company had 68,190 vehicles in 2008, which fell to 44,346 in 2009. This year, this has decreased again, by a quarter, to 33,283 vehicles. This drop could still be due to the long-term ripples from GM's decisions to switch from Masterlease to ALD.

Alphabet remains in the top 10 having grown by 10%. General manager sales development, Paul Hollick, says:?"Alphabet has always grown organically. We've been successful in our aim of winning customers who share similar cultures and values to ours, and retaining them through consistent service and by helping them to run their fleets the way they want to. We've continued to follow that path in 2010, via a very deliberate focus on all our chosen sales channels, including key intermediaries and our business partner programme with the BMW dealer network."

Hollick says the company expects to grow its fleet to 60,000 units in the next few years: "That's in the business plan and it's a level we know we can comfortably reach while maintaining the level of relationship we currently enjoy with customers.

"Economies of scale are not infinitely elastic and there comes a point where the returns from growth start to diminish, but Alphabet is nowhere near that point - you're probably talking of companies with 150,000 units or more.

"Our plans allow us to grow while keeping hold of the good things our customers expect from us."

He concluded: "The majority of leasing companies have, understandably, been fairly cautious over the last 12 months, but Alphabet has seen and responded to a number of converging organisational and technological trends. We're really ramping up our own R&D to bring on new, exciting mobility concepts that will stretch the boundaries of leasing as well as the conventional definition of fleet. They are on track to appear over the next two years and will definitely play a significant part in the next phase of Alphabet's growth."

Arval has also seen growth this year. It largely attributes withstanding the economic crisis to the "stability and strength provided by parent firm BNP?Paribas". Fiona Hall, Arval commercial director, says: "We remain committed to the full range of channels within our marketplace providing a valued service to businesses ranging from SMEs through to the largest fleets."

She adds: "During the past year we have been able to support customers in dealing with their specific circumstances and challenges in a difficult economic climate. We have a clear responsibility to not only provide a range of products and services, but to also offer partnership-based advice and expertise on the most appropriate fleet and fuel solutions with cost management a particular area of focus."

Other notable movement at the top end include the entry of Volkswagen Group Leasing into the top ten and up three places. It has grown its vehicle parc by 14% this year. Meanwhile, third-place Lombard Vehicle Management, while still comfortably holding its position, has reduced its total by 5%, thanks in part to an exit from the broker market (see 'Lombard Vehicle Management exits broker market', bottom).

Lex Autolease continues to cut back on numbers

Nigel Stead, Lex Autolease MD, explains the company's reasons for downsizing.

"Lex Autolease's fleet size has reduced almost entirely by design as a result of a strategic decision taken in 2008/9 to exit some of the business lines acquired in previous heritage companies (long before the merger of Lloyds and Halifax Bank of Scotland). In 2010, new business wins have been strong across most elements of our portfolio, offset by some customer downsizing leaving the core fleet in line with 2009.

"The reduction has put the company on an even stronger financial footing and enabled the business, as a whole, to become even more customer-centric. We are working with like-minded, forward-thinking customers who appreciate our expertise more than our size.

"We are planning for the fleet to fall below 300,000 as a result of the decisions already highlighted with the fleet returning to growth once these vehicles have de-hired. There are no plans to reduce the core fleet and we continue to progress the current integration at a pace that delivers the service excellence on which the business was founded.

"We have a future growth strategy and remain focused on all segments of our business. We have made a substantial investment in our core systems, our e-commerce platform and our consultancy team to ensure that our proposition continues to lead the market.

"In 2010, we have been very successful in winning and retaining business across all our sales channels from small regional businesses to large, global corporates. The future includes growth in new products such as salary sacrifice, which are particularly appealing to both corporate and public-sector customers and permit a greater degree of flexibility and tax efficiency in the benefit provision. As the economy picks up, these schemes will become a more appealing way for our customers to retain and recruit the best quality employees. We are confident that as we exit our integration in the first half of 2011, we will be an even stronger company delivering the very best combination of value, advice, products and service."