After taking over the helm of Fleet Alliance last August after heading up Lookers, Andy Bruce discusses the differences and similarities between the leasing broker sector and the traditional dealership market now and into the future.
The leasing broker sector and the franchised dealership world are two different but complementary channels to market. The franchised dealership offers a single brand solution where primarily retail customers are offered the products and services in that particular brand, backed up by the full, in store experience.
That has been, and remains, the most popular way that retail customers buy cars but, as is the case in the wider retail market, there is a growing trend towards an online and multi branded solution and this is where the leasing brokers have a role to play.
With our Intelligent Car Leasing business, we can show customers all makes and models and the ability to personalise their offer to suit their mileage and contract duration, all at the touch of a button and in the comfort of their own home.
Aside from the convenience factor, there is an increasing desire for people to lease rather than to own assets like cars in the same way they do with mobile phones, for example. Simple, predictable monthly payments are what people are looking for and personal leasing is perfect for this.
On the corporate side of the market, the difference between leasing brokers and franchised dealerships is starker.
In my experience, even the largest dealer groups are still mainly set up to supply the retail market and whilst they do have an offering for the SME market, they find it difficult to gain traction.
On the other hand, the business model of leasing brokers is fundamentally set up to provide a one stop shop for all makes and models for the SME sector, where these businesses invariably run with multi brand fleets.
For example, Fleet Alliance will competitively tender each and every car on an SME’s fleet across the panel of leasing companies we deal with to ensure the customer gets the best rentals on each one.
In addition, recognising that many SMEs don’t have a fleet manager, we will provide access to free to use and sophisticated fleet management software to enable our customers to effectively manage their fleets.
The dealer groups are not set up for this and, indeed, we offer this service on an outsourced basis to some dealer groups to help them access their local SME markets.
Having looked at where the differences are, there’s one thing that’s a unifying characteristic across all market sectors, both online and physical.
The one over-arching factor is the need to provide excellent customer service, and customers want and expect outstanding customers service -just delivered in slightly different ways. At Fleet Alliance and Intelligent Car Leasing we pride ourselves on the award-winning quality of our customer service.”
Salary sacrifice to drive EV sales
The global chip shortage has led to supply issues across the new car market throughout 2021 and it looks as if this will be a major influencing factor throughout the coming year.
We expect the shortage of semi-conductors to continue throughout 2022 and impact on new vehicle supply. But recent discussions with a number of vehicle manufacturers suggest that they should ease from around the middle of the year, before returning to something approaching normality at the start of 2023.
The global shortage of microchips has been a factor in the growth of EVs as OEMs switched production lines to models which would most help them hit their carbon targets. Under European regulations, OEMs have an average new car CO2 target of 95g/km by 2024 – and a further 15% reduction from 2025 onwards.
As a result, we have seen a dramatic increase in the electric models now available and coming onto the market as the manufacturers move away from ICE technology.
However, buyers want to do the right thing for the environment ahead of any government action. And my sense is that companies in particular are being driven by the need to do the right thing well in advance of any deadlines, driven by their own ESG policies rather than government targets.
As a result, we see salary sacrifice being extremely important in the coming years, especially under the current tax regime which offers huge advantages for corporate buyers with Benefit-in-Kind tax rates as low as 1% currently, rising to 2% from April until April 2025.
We are seeing a huge number of enquiries from businesses that are not currently customers who want more information about salary sacrifice and the opportunities that exist. They may still operate company cars but want help in making electric vehicles available to a wider cross-section of employees.
This is at the heart of our core competence and will be hugely important for us and our growth ambitions going forward,” he said.
Mr Bruce took over the helm of Fleet Alliance last August, while Managing Director Martin Brown moved up to Chair in a more strategic role, as the company set its sights on a new phase of expansion. A former CEO of Lookers plc, Mr Bruce was joined at the same time by colleague Nigel McMinn as Chief Operating Officer. Together they had enjoyed considerable success at Lookers, leading it to become one of the largest motor groups in the UK over a period of seven years.