What were your first impressions about the automotive leasing industry in Ukraine and what have you done since?
When I came to Ukraine almost two years ago, I found a very archaic situation in corporate car fleet management. Most of international companies operating in Ukraine were still buying cars directly and managing their own car fleets: as an evidence for that, we can look to the very tiny size of the car leasing market: only around 25000 vehicles, which also includes volumes from individuals and Ukrainian SMEs! Whether on an emerging market or a developed market, the tendency of any business is to maximally outsource cost centers that are not related to the core business of a Company. In that sense, the car fleet cost center is one of the most significant and difficult to manage for any international corporation, both in terms of cost control and operational efficiency. Any Company having a significant car fleet will be facing significant difficulties if managing it internally: for example the huge number of suppliers (service stations, tyres service providers, assistance companies etc), resulting in an enormous amount of invoices to be checked and controlled, as well as in a difficult follow-up of the necessity, reliability and rapidity of any repairs, or the challenging process of insurance claim management to be handled on a daily basis. On the other side, the fact that most of these international companies remained until now in car fleet outright purchase was related to
the poor leasing offer existing on the market, and resulting in a negative customer and driver experience: local leasing companies do not provide the international standards in terms of processes, customer care and product that exist anywhere else all around the World: real outsourcing of exploitation risks was not actively proposed and explained to international corporations, and instead led room for abuse by dishonest parties. For example, the usual local approach was not to include in a lease payment all the unplanned repairs of a car (i.e. the repairs not covered by the manufacturer warranty and not included in the regular maintenance list of the vehicle). This resulted in keeping Companies handling risks on their own, receiving additional invoices any time a repair was required. We also see many cases when a local leasing company included only the insurance premium, leaving clients alone to handle the claims and repairs processes!
Since I became General Manager in Ukraine, we have decided to reorganize our company in order to concentrate on full service operational leasing (FSL), that is the international
car fleet outsourcing standard used on all other markets, including in the 41 countries where ALD Group operates (in Europe, South America, North Africa, Western and Eastern Europe, Asia). Our ability to invest and develop is based on the fact that we are the only international company solely specialized in operational leasing and car fleet management in Ukraine, while our shareholder, Societe Generale, guarantees us with a stable and continuous source of financing. Proposing a reliable outsourcing solution to our international clients does not only mean to propose the correct product and concept. It also requires excellence in servicing clients: having strong and automated tools and processes, and being able to deliver the same level of customer experience to any of our cars users. That is why we have made significant investments over the past 2 years: we have moved our IT systems to a centralized tool supported and maintained at Central level, implemented a CRM tool also controlled at Group level and allowing us to follow-up any request or communication with our clients and drivers, strengthened and centralized our 24 hours call center, changed almost half of our existing staff, developed a talent
development training center, implemented an internal system of KPI-based remuneration system, established new processes of suppliers audit/controls. As a result, we are the
only leasing company handling since 2013 ISO certificates from Bureau Veritas, the last one being ISO 9001-2015. We believe that as most of our clients are international Groups, we shall work as their supplier according to the same criterias of quality than they are, allowing them not to handle any operational risks, while helping them to concentrate on their core business and facilitate the achievement of their targets.
How does ALD Automotive control costs on behalf of clients? How does it make running a car fleet cheaper?
We manage more than 4,500 cars and belong to an organization that has more than 1.5m vehicles under management, so we have the power to negotiate better prices. But it’s not only a question of prices – it’s also a question of service level agreement and quality control. Specialization allows us to be wholly dedicated to this niche. For example, half our company works in the operational-back office alone. The procurement people and call center staff are highly trained, while the employees in charge of controlling all the invoices, agree on repairs, decide which supplier is better, and so on. We can check and control all our data, allowing us to know who does repairs quickly or more reliably. Control is the key word. We send auditors on a regular basis around the country just to check on what is going on, and we ask our regular clients for their opinion. As a result, costs come down and efficiency rises. We want to create the best conditions for our clients to focus on their core activity. We sell a concept that is worldwide - full service leasing. Full service leasing is very simple as an idea. When a client wants to outsource his or her car fleet, the client only pays a monthly fee and nothing else. The client transfers all the risks to us and we do all the work. It’s not just buying a product; it’s buying risk expertise. We relieve the client of all the risks – compliance risks, exploitation risks, etc. That is one very important reason why full service leasing is even more necessary in emerging or unstable markets than on stable ones.
How much could a company save on their car fleet expenses by working with ALD Automotive?
We have a two-step approach. Our initial goal is to explain to the potential client the company’s cost structure and risks. We work like counselors or auditors. We say: we are experts and we are independent. We can build detailed models to correctly assess car fleet costs because this is our core business. This is much more complicated than a client usually thinks. He or she might have full access to the car fleet data, but the analysis is complex. Devaluation impact, hard currency related costs or mileages/duration of car exploitation shall be taken into account: all that requires to know how to retreat available gross data. Our first added value lies in our ability to build up key-in-hand financial models to explain the reality of expenses and risks to our future clients. In general, we are able to show between 10% to 20% savings on direct costs for any client in outright purchase. And these are just the direct costs. When we compare the cost structure of a potential client with what we can offer, we show only the tip of the iceberg, because the only concrete numbers are those related to the car fleet. There is also the overall impact on the business. For example, if a car takes two hours to get repaired with us but two days if managed internally, this has an impact on business efficiency. This is difficult to estimate, but the impact is real. The accounting department, with us, would receive only one invoice per month in which everything is included, as opposed the hundreds of invoices under an internal management scheme, costing time and money. And that is before considering losses due to potential fraud.
In conclusion, I would like to say that we have a very open approach. We are here to explain to clients what the problems are and how we can find solutions together. Outsourcing means support for your business. We don’t want to be just a service provider; we want to be a partner, that can be trusted and which objective is always to innovate and search for solutions to improve the work conditions and efficiency of our clients and drivers.
General Director, ALD Automotive