It’s the day after Francois Hollande’s victory in the French Presidential elections and as the Euro takes a battering, the French markets are up – austerity is suddenly a dirty word in France. Talk is instead turning to growth – something ALD Automotive has sustained throughout the economic turbulence of the past few years. 

That’s because the fleet management and leasing industry tends not to ride the economic rollercoaster quite as readily as other industries, according to Pascal Serres, Deputy CEO, ALD International (left): “Full service leasing is an anti-cyclical product, so we’ve continued to grow on the sell-side throughout the financial crisis of the last few years. In fact today we’re in a great position – we’ve come out of the crisis stronger.”

It’s a confident statement, but with the need for company cars and other forms of corporate mobility remaining strong whatever the economic weather, full service leasing continues to offer a low-risk, capital efficient way of financing new vehicles. And with a fleet of over 917,000 vehicles worldwide, ALD enjoys a substantial slice of the pie, as the second largest player in Europe and the third largest globally.

The company itself dates back to 1946, with its roots in Belgium, but has only latterly been under the corporate umbrella of French banking giant, Societe Generale, under whose tenure it has enjoyed compound annual growth of 9% for the last nine years. 

Societe Generale’s interest in full service leasing and fleet management is relatively recent however, having founded the Temsys leasing brand in France in the early ‘90s and acquired ALD Automotive from Deutsche Bank in 2001. That move took its leasing and fleet management operations into the global market, setting the foundation for the company’s international growth ambitions. And it saw the company’s geographical foothold in the fleet management industry spread from France into Spain, Germany, Morocco, the UK and the Czech Republic.

International expansion remained ALD’s focus, with the subsequent acquisition in 2002 of Ford’s full service leasing subsidiary, Hertz Lease, marking its next major milestone: “The Hertz acquisition gave us the basis of our current structure – with its operations in Benelux, northern Europe, Italy and the Nordic countries”, explains Serres.  

Today, when set against the shifting powerbase of the global economy, a diversified geographical footprint remains one of ALD’s strong suits. Although strongest in Western Europe where its fleet extends to nearly 580,000 vehicles, the French headquartered company has been quick to jump on emerging market opportunities, investing in Brazil, Russia, India and China (‘BRIC’) as well as Turkey and North Africa between 2003 and 2007, to exploit the strong growth potential in younger markets. 

But with growth in full service leasing slowing in Western Europe to around 3.5%* over the coming year, its presence across 37 countries undoubtedly helps ALD to hedge its exposure to slowing markets and exploit growth wherever the action is. 

According to Serres, the customer base in its key emerging markets and BRIC countries is not primarily domestic in origin, but intertwined with ALD’s international customer base (which makes up 43% of the fleet): “In the developing markets such as Mexico, we’ve enjoyed huge growth, with fleet volumes almost doubling over the past year. The majority of customers in these markets are big multinationals – often North American and Western European pharmaceutical or technology companies – the kind of customers that are always going to need cars wherever they operate.”  

Catching the rest of the big industry players napping is one way of stealing a march on the competition – and ALD reckons to be the only international fleet management company with an established presence across Brazil, Russia, India and China. That’s a nice place to be right now, with recent industry analysis predicting 19%* compound annual growth over the next four years in those markets.

So ALD is courting big corporates in the less mature territories, but where are the opportunities in the established markets coming from? Along with many of its competitors, ALD reckons SMEs are providing the Western European leasing industry with growth opportunities: “the market is progressively moving towards SMEs and through our distribution channels we can reach many of these customers,” comments Serres.

The distribution channels Serres refers to are primarily white label arrangements with car manufacturers – an area in which ALD considers itself a pioneer: “All in all we have more than 70 agreements in place, with the likes of Ford, Opel/Vauxhall, Toyota, Renault, Kia, Hyundai, PSA and others – we’re regarded as the specialists in the industry when it comes to white label products.” 

The other obvious channel to tap into new SME customers is via the retail banking sector – and again ALD is building a distribution network by working not only with its parent company Societe Generale, but white-labelling to other banks – including RBS’ embattled Lombard brand in the UK. Around 30,000 vehicles are currently managed this way through partnerships with the banking network, but this is on the increase, and ALD’s UK arm expects the Lombard deal to add another 30,000 contracts over the next five years.

Adding new contracts may be the key to success on the sell side, but for a company that last year acquired nearly 250,000 vehicles, disposing of them effectively is vital to protect the bottom line. And one area that’s affected ALD during the global financial meltdown is the vagaries of used car residuals. Like most of its competitors with very large fleet portfolios, implementing a multi-channel remarketing strategy and putting as much metal in front of as many traders as possible, seems to be the way to go. 

“Between 2009 and 2010 we had issues with the used car market – we were making some heavy losses because of falling residual values. Last year though, we sold 175,000 cars through our remarketing channels, including our own online auction platform, ALD carmarket, which we now use across most territories,” explains Serres. “A lot of dealers have signed up – it’s quick, low-cost, and the best tool for disposing of vehicles effectively.” 

ALD is focused on the online platform for its remarketing plans, but around 10% of vehicles also get sold on to their original drivers at the end of lease – the average term of which is 42 months. What of its approach to fleet industry hot topics like sustainable mobility and risk management? Like most of its competitors, ALD has embraced the benefits of offering branded solutions that help its customers comply with ever tightening health and safety legislation and gain greater insight into the carbon footprint impact of their fleets.

“These are growth areas for us and most customers are very keen to participate – it’s cost effective and particularly where HR departments are involved in fleet decision-making, becoming more important,” acknowledges Serres.

Working with customers on areas like eco-driving techniques to improve driver behaviour under the ALD DriveSafe programme, it also uses telematics-based solutions such as ProFleet2, which provides fleet managers with auditable records of business journey data. According to ALD this system helps identify danger areas like driver fatigue and enables fleet managers to keep a watch on potential risk points such as speeding or harsh acceleration and braking. 

The ability to drill down into private vs. business use also has obvious benefits from a tax reporting perspective, and being able to automatically send messages to drivers when a service is due is another benefit of the system. “It’s all about improving communications between the driver and the lessor,” comments Serres.

Offered initially by ALD Automotive UK, ProFleet2 is now being rolled out in other European territories, starting with the Spanish market.  As for the drive to reduce CO2 emissions, not many in the industry could confidently claim to be blazing a trail with electric vehicles, but a good track record with EVs does bolster ALD’s environmental credentials somewhat. As an early adopter of the technology, it now has a fleet of 1,000 EVs throughout Europe. 

ALD is also involved in the Better Place scheme, which allows replacement of depleted batteries with fully charged ones in less than 3 minutes (now operating on the Renault Fluence Z.E. in Denmark), but Serres admits the fleet market appeal is currently limited: “Deployment to customers is still at an experimental level for the time-being – the key issue is the increased cost and limited choice on the EV market. And of course, the constraints of range outside the urban environment.”

As for the future, any concerns about growth, austerity and the ravaged Eurozone are not showing too readily – “We don’t forecast any serious decline, but the markets in some Mediterranean countries like Spain, Italy and Greece won’t see much expansion – we can’t see any major growth there over the coming 2 to 3 years.”

ALD Automotive – Facts & Figures

Fleet size – 917,000 vehicles

Under management only – 26%

Full Service Leasing contracts – 74%

Largest direct market – France (282,880 vehicles)

Geographical spread – 37 countries across 4 continents

Newest market – Serbia (2007) Oldest market – Belgium (1946)