Pendragon Contracts is celebrating its 30th birthday this year, having battled through the credit crunch, realigned its business and is now looking to grow its fleet again.
It started life as Jackson Leasing in 1982, the year the Ford Sierra replaced the Cortina, and the company was acquired by Williams Holdings in 1984 and operated within the conglomerate’s car division.
In 1989, the business was demerged from Williams Holdings and was established as a core division of Pendragon plc, Europe’s largest motor group, which has more than 250 outlets trading nationally as Stratstone, Evans Halshaw, Chatfields, Quicks, CFC, Pinewood and Quickco.
In 2004, Pendragon acquired CD Bramall and in 2006, it took over Reg Vardy, with both of the leasing businesses becoming part of the contract hire operation.
Like many of the medium-sized leasing firms, Pendragon was hit hard by the credit crunch. In 2009, most of its external funders exited the market, faced as they were with the harsh challenges of the wider economic crisis.
But the business continued to operate and find new funders, and managing director Neal Francis reckons that while lots of things change and there’s always something new to battle, much also stays the same.
‘Here we are 30 years later still going strong, and there’s always different market conditions to deal with, and you just have to find a way,’ he says.
‘From a growth point of view, over the last few years, the business has contracted – for example, when RVs took a real hiding – and then grown, and in terms of the last five years, since 2008, the fleet has shrunk with the departure of SME and personal contract hire funding, but growth will increase as funding has turned a corner now.
‘There are new funders coming into the SME and personal contract hire market, and now we’re writing 50-60 units a month in that area, and so we will look to press forward in the way we go to market. We used to use brokers, but we’re not going to do that so much anymore. Now with the internet, we can get some of the same activity as brokers and we’re having quite a lot of success doing it ourselves.’
Francis believes that SMEs are often not well handled by larger firms and Pendragon’s expertise in working within the dealer group means it is better suited to operating in that market.
‘All of the manufacturers say that small and medium firms are where their focus is, but in reality the retention rates are very poor, and many have unrealistic return standards, and they’re relying on dealers to sell those products. But the customer isn’t aware in terms of product types what is about, and most propositions are price-led, commoditised and heavily supported. It’s a very fickle market.
‘I believe it is how you deal with the inquiry which is how you can differentiate yourself. It doesn’t have to be so heavily price-led.’
Francis says the larger fleet business is ‘kicking along ok’ and that the firm is picking up business in large ticket sectors.
‘But this year the manufacturer finance houses are coming out more aggressive than ever in terms of price. So again, it’s about putting together a sustainable, flexible package that is consultative, giving fleets the right advice in terms of whole-life costs, not just the headline monthly rental.’
The firm has invested heavily in social media and online presence, because Francis believes this is where good customers will be won, and then retained. So what of the next 30 years?
‘We’ve got to embrace changes in the market to make sure we’re ahead. The interesting challenges we face in the business are driven around two or three different areas. Tax and legislation is one, and how to deal with the changes. We perceive that the Government sees the market as a soft target. Then there’s the issue of the metal itself, and whether electric cars will make an impact, and all the changes around technology. But then there’s change in the leasing industry itself: if you go back 30 years and you look at the firms operating then, there are 30 brand names that are no longer in the market.
‘You’ve got to have the support, and we’re fortunate we have that thanks to the Pendragon group, so in that sense it’s a guardian for the business.’
Francis is already looking at legacy, about how the firm can win business and keep it rather than just fight on front end cost for easy wins with no longevity.
‘It’s a tough market out there, but not impossible, with our business we want to win strong business, when we go for new customers we are interested in winning clients where there is the possibility of three change cycles. And that’s part of the consultative element of it, the danger is if people sell rentals then they commoditise the proposition. That’s not what we’re about, and that’s why we’re still here after 30 years and intend to be for another 30, at least.’