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BC50 - TOP 50 LEASING COMPANIES: An upwards drift for lease world

Date: 18 October 2011

BusinessCar's annual gauge of the state of the leasing industry notes the rise and fall of the biggest 50 firms in the business. Rachel Burgess reveals the winners and losers shaping the market in 2011

It's been a while since the UK's biggest leasing company, Lex Autolease, was created from the merger of Lex and Autolease.

This year, that integration is old news, having been usurped by some big developments, most notably Alphabet buying ING Car Leasing, and Leasedrive Group taking over the running of Masterlease.

But despite those moves in the market there has been little change in this year's BC50, BusinessCar's round-up of the top 50 leasing companies, with Lex Autolease still dominating the arena with 280,218 vehicles on risk, versus second-place Leaseplan at 130,200, despite Lex Autolease's continuing downsizing. (New boss Rick Francis explains the reasoning behind the strategy in 'Deliberate downsizing at Lex Autolease' below.)

Leaseplan comfortably holds second position and has grown by 5%. Commercial director Matt Dyer says the increase has come from a variety of sources, including new business wins, the launch of new products and developments on existing contracts. "We have provided advice to clients on how to optimise their fleets in ways such as selecting fuel-efficient vehicles, mileage management and driver training schemes.

He adds: "We have created a new dedicated LCV function to provide expert advice in a distinctly different market place. Salary sacrifice is likely to be another area of growth for Leaseplan as it provides organisations with an innovative route into the provision of a fleet for employees, despite a challenging financial climate.

"The growing demand for CVs is most beneficial to Leaseplan. Companies looking at leasing for the first time are also an important, valuable area. Our experience over the past 18 months shows that customers are looking to boost their own productivity by outsourcing fleet, meaning that we are seeing significant growth in full outsourcing services. Earlier this month we were delighted to announce a strategic partnership with Toyota as part of our commitment to greener motoring."

Lombard Vehicle Management, previously in third place, loses out to Arval, after dropping its vehicle numbers by 18% (85,677 to 70,621). The firm refused to comment on the decrease, an emerging pattern that may well be linked to a rumoured sale of the company, which has been persistently linked to GE Capital throughout the year. A new boss, Simon Recaldin was appointed quietly earlier this year, with outgoing MD Stuart Houlston moving to another part of parent firm RBS.

So, Arval reigns in third place, growing its vehicle parc from 80,753 to 86,932. Chief executive Bart Beckers attributes the increase to its "ability to retain our current customers across all channels through a combination of excellent service, relevant products and services and the ability to respond to their fleet requirements".

He adds: "We have also seen strong growth at the SME end of the market, especially through our indirect broker channels and third-party partnerships."

Beckers continues: "We have a clear strategy for future growth in the UK, and internationally as a major leasing group. As a business we have been able to respond quickly and effectively to the changing market conditions and the requirements of our customers. We will continue to do this in 2012, which will give us the platform for continued growth."

Arval continues to develop its systems and processes and often utilises best practise from across the Arval Group, according to Beckers. But he warns: "The growth that we have seen shows that we are doing a lot right, but there is no room for complacency and we will continue to look forward and improve as a business."

However, Arval won't remain in third place next year, with Alphabet's imminent integration of the ING?Car Lease book it recently confirmed the acquisition of. Alphabet already jumps from 10th to 6th place in this year's BC50, but joining the two companies (ING is currently in 8th place) will create a 100,000-strong car fleet. The purchase of ING Car Leasing in a £554m deal, after securing clearance from the European competition authorities is the "perfect marriage" according to Norbert van den Eijnden, European head of Alphabet, who adds that a pivotal aspect of its services would be its strengthened multi-make approach across Europe.

ALD Automotive easily holds its top five spot, with 63,651 cars, up by 13%, no doubt helped by its growth in white labelling.

Other smaller yet notable firms include Venson Automotive, at 24th place, which has grown its fleet by 102% to 9442, and Fiat's fleet outfit FGA Capital, which has risen by 55% to 5400 vehicles.

Deliberate downsizing at Lex Autolease

Rick Francis, managing director at Lex Autolease, explains the company's downsizing strategy:

"Our fleet is pretty much where we planned it to be given the deliberate intention to exit non-profitable business and gradually run-out a number of heritage contracts. This was largely accounted for by the former Bank of Scotland broker fleet, some retail business and a very small number of large corporate accounts that were simply uneconomic. Three years ago this would have accounted for about 60,000 units and our financial results have commensurately improved since that time.

"However, during the Lex Autolease integration we did plan ahead for volume growth, which we forecasted to come through towards the end of 2012. This remains our belief. We have six core fleet channels, which have been in place for the last two years and each channel has the capacity and expectation to grow. Indeed, some are already starting to grow now that the integration is complete and we are entering a new phase of our strategy - business improvement.

"The current and future focus of business is to leverage the newly integrated business to ensure our service offer demonstrably leads the market, irrespective of market channel. We are rolling out a series of product and service improvements led by the resource previously devoted to the integration process. This is one of the positive outcomes of a large, complex integration and we shall continue to benefit from the breadth and depth of experience and expertise that has been established during this period of change. The outlook for Lex Autolease looks bright, despite the wider economic conditions."