Peugeot Contract Hire/Citroen Contract Motoring merger: When two become one
22 February 2017
Author: Tristan Young
Peugeot-Citroen (PSA) has undergone significant changes in recent years with a particular boost to organisational efficiency improvements at the manufacturer and its networks, plus the addition of the premium DS brand.
Now the combining of its two leasing divisions, Peugeot Contract Hire and Citroen Contract Motoring, under the new single name Free2Move Lease, means it's fleet's turn to improve.
Duncan Chumley, the managing director of Free2Move, said the idea for the combined company was started 18 months ago and, as BusinessCar reported, was revealed in the autumn of last year with a full rebranding and launching to customers from 3 January this year.
Speaking exclusively to BusinessCar, Chumley said: "It's part of the 'Push to Pass' plan from Carlos Tavares [PSA CEO] and it's around the idea of mobility, which would offer lots of different solutions. Free2Move Lease is about how we supply to business customers."
The plan now is to move from a simple lease-only offer of Citroen, Peugeot and DS vehicles to becoming a fully fledged fleet company offering all makes [including non-PSA brands] and also fleet management services, something the two previous contract-hire firms just didn't do.
"Customers were conscious of the Citroen and Peugeot lease companies but customers looking for a complete service looked at competitors," said Chumley.
Now the two businesses are combined, Chumley claims Free2Move is the seventh-largest leasing company in the UK and carries the residual risk on 64,000 cars. And combining the two operations under one umbrella will means costs savings for customers, he said.
"Previously, we've gone into companies as one leasing firm or the other, or as both. But now it is just one."
The merger isn't just a UK move either. "We launched on 3 January in the UK and France and we're launching in Germany on 1 April and in Spain on 1 June. The total fleet size is 450,000 vehicles. It's slightly different in each country but it means we have 100,000 customers across Europe."
The next stage, following the initial rebranding, is to look at other services around mobility.
"All our cars are on risk - we have no standalone fleet management offer.
"However, connected services will be first. We will build on what we have. We will build on the van telematics. It's mileage data only so far, but it could be bus data [vehicle diagnostic information]. This would be used to minimise fleet downtime.
"When it's on cars as standard then we could do that with them too. And we could do bespoke services if that's what customers want," he added.
Chumley is also conscious that not all fleets will want PSA vehicles and so sees the new company's rivals as businesses such as BMW's Alphabet.
"Many customers like to deal with one company for all their requirements. And their requirements could be beyond the products that PSA offers such as 4x4s and premium vehicles beyond DS.
"We'll start on multi-brand, in a small way, in the second quarter of this year. We're developing the systems now and we've just employed a manufacturer relationship manager to help this too.
"Multi-make is one of the reasons we've rebranded, so that we are seen as separate from Peugeot and Citroen."
According to Chumley, existing customers will initially notice a difference simply in the name and the contract. However, he points out that the terms and conditions will remain the same.
"Moving forward, on renewal the aim is to offer a complete range of cars no matter what the needs, and fleet management and connectivity. For example, we don't offer licence checking now, but we will."
In terms of growth, Free2Move will be targeting mid-sized fleets.
"In the past we've been very successful with SMEs through our dealer network. This is a particular strength of ours. The newly combined sales force will now focus on fleets of between 50-200 vehicles. We're looking for those people that couldn't deal with us because they wanted more than what we had on offer.
"We're also looking to the public sector, which likes a complete solution," he said.
However, Chumley is realistic about how quickly this will happen: "The first year is about consolidation and we've not got massive ambitions for growth. This year maybe we'll add 1,000 non-PSA cars.
"However, we should be at 70-75,000 vehicles in three to four years."
Chumley points out that it takes time to go from a contract-hire only business to a full-offer fleet business. Part of the change includes hiring the correct staff, which has already grown by 22 people to 52.
"In six months we should be in a very strong position.
"We're in a soft launch, with our first task to put everything into a single company. But as we develop products and services we'll shout about it."