Boundaries between fleet and retail leasing markets blurring, says Sofico
As the boundaries between pure fleet and pure retail sales in the European automotive leasing market blur in line with increasing convergence of the two markets, suppliers need flexible, smart systems to help manage the change.
So say global automotive finance, leasing and fleet software provider, Sofico, which says the increasing convergence trend comes as suppliers identify new strategies to try and maximise their market share.
Captive or manufacturer-owned finance companies, those affiliated to one particular make of vehicle, are increasingly turning their market attentions towards corporate fleet customers. In a bid to increase their share of the corporate fleet market, they often bypass some of the more traditional routes to market by going direct.
Many are now launching full service lease products aimed at fleet owners or putting a renewed focus on their existing finance and lease offerings, targeting mainly small fleet owners and sole traders.
At the same time, multi-brand, international leasing companies are focusing their ambitions, not just on corporate customers, but on individual drivers themselves – and are designing and developing a range of products aimed specifically at the individual.
Private leasing, for example, is becoming more prevalent across Europe, but especially in countries like the Netherlands and Belgium.
Wim Bauwens, sales and marketing at Sofico, says this increasing market convergence is altering the systems’ requirements of many leasing suppliers.
“In an increasingly converging market, both multi-brand leasing companies and captive finance companies run the risk of maintaining two portfolios of customers in two separate systems and duplicating a considerable amount of effort.
“It is far more efficient and cost-effective to manage all contracts, regardless of retail or fleet, B2C or B2B, in one system to ensure a good customer experience, to avoid duplication and reduce the errors that this can cause as well as maximising opportunities to cross-sell and upsell.
“Current retail systems are good at processing and managing high volumes of individual contracts, but traditionally these are for a simple finance product without any additional services.
“Fleet systems, on the other hand, are good at managing complex products, such as full service leasing with finance and an abundance of different of services, but don't have the same operational efficiency or scale of retail systems.
“To manage both portfolios of contracts in this new converging market on one system, you need to add the complexity of operational lease products to the retail software system or you need to add the efficiency of a retail software offering to the fleet management system,” he said.
As a result, Sofico has adapted its Miles leasing and fleet management software so that it can handle higher volumes of individual contracts efficiently and effectively.
“That’s why the concept of supporting a mixed portfolio of retail and fleet customers is a target for our Miles software. This is very much in line with our continuous strategic development of and investment in Miles, in order to maintain our market-leading position in the market,” added Wim Bauwens.