New CEO reflects on first 100 days and the new year

Fleet Alliance talks to CEO Andy Bruce regarding his first 100 days at the helm of the leasing and fleet management specialist and asks his views on the coming year.

There is little doubt that one of the highlights of the last year has been the rapidly growing movement towards electric vehicles in light of the Government’s ban on internal combustion engines in just nine years’ time.

And it is something that is very clearly reflected in Fleet Alliance’s order books which finished last year at record levels, with pure EVs and PHEVs together accounting for 52% of all new car orders over the last 12 months, said CEO Andy Bruce.

“It is very apparent that the switch to electric vehicles is accelerating with ever-increasing numbers of both corporate and retail buyers ordering EVs. We are seeing rapid growth in EV orders, especially in recent months, and expect this to continue throughout this year.

“In our corporate business, some 59% of new car orders last year were for EVs and PHEVs, with pure EVs accounting for 26% of the total, as more businesses moved down an electric route.

“Meanwhile, 29% of our personal orders were for EVs and PHEVs throughout 2021, and this trend accelerated towards the end of the year with the last month seeing 28% of all personal new car orders being for pure EVs alone – from just 7% last January.

“Aside from the obvious tax advantages to corporate customers, I strongly sense that companies are fully embracing EVs as part of their wider ESG (Environmental, Social, and Corporate Governance) agenda.

“Similarly, for retail customers, and this could well be influenced by the COP26 climate conference in November, there appears to be a growing desire to play their part in helping the planet on a personal level,” he said.

A new phase of expansion

Andy 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, Andy 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.

“We see huge potential for Fleet Alliance going forwards from what is a great foundation,” said Andy.

“The business is almost unique in having very strong credentials in both the fleet sector, with our Fleet Alliance brand, and in the retail sector with Intelligent Car Leasing, and we see tremendous opportunities in both.

“On the corporate side, the growth of salary sacrifice, especially for EVs, has a huge potential, and we are very well placed with our own salary sacrifice scheme which we launched in August with a strong focus on SMEs.

“Some of the salary sacrifice providers require quite large fleet sizes – typically into the hundreds -to get involved, but we provide support to businesses of any size to help them achieve the benefits it undoubtedly brings.

“On the retail side, as supply issues ease, the new car market will start to return to more normal levels. This will present growth opportunities for personal leasing as consumer trends point clearly to a desire to lease rather than own assets, and personal contract hire has obvious attractions.”

Impressions of the broker sector

After his first 100 days in charge at Fleet Alliance, what has been his impression of the differences and similarities between the leasing broker sector and the traditional dealership market where he has spent much of his automotive career?

“The leasing broker sector and the franchised dealership world are two different but complementary channels to market. The emphasis in the dealership world is on the retail customer. Indeed, the OEMs tend to refer to them as Retailers, pointing to the role they see for them in the market.

“By its very nature, the franchised dealership offers a single brand solution where customers are offered the products and services in that particular brand and it’s 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 customer 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.”

Looking forward

Looking forward to 2022, Bruce said that global chip shortage had led to supply issues across the new car market throughout 2021 and it looked as if this would 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 good news is that we’ve seen a really strong performance on orders and we’re on track for a record year, which is really encouraging.”

The global shortage of microchips had been a factor in the growth of EVs as OEMs switched production lines to models which would most help them hit their carbon targets, said Andy.

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.