ALD Automotive: full service - Stéphane Renie
Despite sluggish economic growth across much of Europe, ALD Automotive's full-service leasing solutions remain in high demand. Sales and business development manager Stéphane Renie tells FDE how the group has managed to offset these tough conditions, not to mention complex local regulations, to drive growth.
In the context of the current economic climate - typified by increased focus on core business and the need for prudent management of capital - the purchase of vehicles is far from the top of up-front expenditure itineraries for many finance directors.
Consequently, full-service leasing contracts, in which vehicle obligations, from delivery to resale, are effectively outsourced to dedicated fleet management companies, still remain the preferable option for corporations looking to budget ahead and improve efficiency.
ALD Automotive continues to set the standard in the field of international full-service leasing. In spite of said ongoing economic woes in its traditional market of Western Europe, the group has managed to achieve year-to-date growth of 4%. This has been due to a growing footprint in international corporations and, in no small part, to the rise of small and medium enterprises (SMEs) seeking car-leasing solutions.
"Obviously, we've seen something of a slow down in Western Europe when it comes to full-service leasing," says Stéphane Renie, sales and marketing director at ALD International. "It's still unlikely that we will be seeing double-digit growth in some of those markets, but SMEs still offer plenty of potential."
ALD has also counteracted unfavourable conditions at home by reaching into emerging markets. Central and Eastern Europe continues to experience growth, while Brazil and Mexico have proven to be lucrative, with the group posting double-digit growth in both countries over the last two years.
Global platform, local expertise
According to Renie, ALD differentiates itself from its competitors through a strategy that is appreciative of the fact that developing markets are not homogonous, and are instead evolving at disparate rates. Consequently, while rolling out its international platform, ALD approaches them in a unilateral fashion, placing great emphasis on local expertise on the ground to fine-tune its product portfolio.
"We try and define our products to local needs," he explains. "So, whether it's in Brazil or Turkey, we have skilled people on the ground in those countries, who have an expert knowledge of local market practices and regulations.
"We are also in the fortunate position of being one of the only players to combine a full-service leasing offering with a fleet management offering. In some of these markets, where there is still a strong acquisition culture, this is really helpful, as the latter can be a good transition for companies looking to outsource their fleet management without giving up the property of vehicles."
Renie is also realistic about the current crop of market bugbears. He is the first to admit that demand for full-service packages in China could be better - in spite of ALD having been present in the region since 2006 - and has been hindered by complex local regulations.
"There's still a long way to go in China," he says. "One of the main reasons why full-service leasing has taken a long time to take off there is because there is no single leasing regulation across the country - they vary from province to province, which can pose a real headache., but it seems we are getting there, slowly."
Another market concern relates to recent proposals by the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) to change the accounting for vehicle leases and rental agreements.
If the model is ratified, it would mean that all operating leases would be put on the lessee's balance sheet. The market reaction has been lukewarm, at best; ALD, alongside its competitors Arval, Athlon and LeasePlan, has been vocal over their misgivings.
"We don't agree with the current draft, and recently issued a letter to the IASB on the subject," says Renie. "It's a complex issue, but we don't believe that that an operating lease should be treated as a pure financial transaction. It doesn't reflect the nature of our product today, which is more of service product than a financial product."
However, Renie is optimistic that ALD will continue to post strong sales results going forward by increasing geographical scope and business with large corporates, and consolidating its white-label partnerships with manufacturers.
"ALD has been a pioneer in this area," he says. "Today, it has in excess of 70 individual country agreements with original equipment manufacturers (OEMs) to provide these kinds of white-label schemes. It's really instrumental for us in generating growth - this portion of the business is already growing by 15% on a yearly basis."