After S1, there were 41,514 vehicles managed by the operational leasing companies, based on the ASLO statistics. The main factors causing the slow growth were the legal changes affecting the operational leasing players, the limitation of the deductibility amortization and the stamp tax together with the general difficult economic context. Such legal changes have had a major impact on the profitability of leasing companies and have hindered any significant investments so far this year.
Focus on clients’ expectations
Operational leasing is still an emergent market in Romania and the evolution in the last 8 years has shown that. The growth was very slow in the first half of the year, but it still existed.
This eco tax has caused a far more negative impact on the market: it has a direct cost impact on the new vehicles contracted under operational leasing and for the used vehicles sold at the end of their leasing term. For ALD Automotive the impact is even greater because we have been the first to start our operations locally. So we have more vehicles in the fleet which reach the contract termination and which are put for sale on the bidding platform. From our total fleet we estimate that up to 2,000 vehicles are exposed to the eco tax at end of contract. Thus, the effects of this tax are one major aspect to be considered for 2014. For sure however we will continue to see a rising trend in operational leasing and if legislation permits we should see a recovery of the volumes.
At the end of 2012 ALD have registered very good financial figures, where we have reported a turnover of nearly Euro 30 mil while maintaining a healthy profit. This year we expect to exceed the turnover attained at the end of 2012 and continue our customer portfolio growth, despite the recent market challenges as the legal changes affecting the operational leasing sector. Although the limitation of the deductibility amortization was applied until the end of May for operational leasing companies, about 30% of the vehicles in our fleet were directly impacted by this limitation.
In terms of client retention, last year we’ve achieved 86% renewal of our existing contracts and this year we’ve noticed so far an 87% renewal rate, which confirms again the successful long term collaboration we share with our customers. We also saw a rise in the number of clients which grew to 255 companies at the end of September 2013, resulting in a 4% increase compared to same period last year.
This year, too, we have focused on the internal efficiency of our processes and cost optimization strategies for our customers:
we’ve supported our customers with TCO reduction plans, we’ve integrated a new tool in our internal process for the short term vehicle rental management, we’ve constantly improved our customer care service and we’ve obtained two ISO standards - 9001:2008, which certifies the quality of our management system and14001:2005 that stands for the good development of our environmental management system. We’ll continue the year with the launch of a new app-based service meant to increase the drivers’ mobility, called ALD mobile and we also plan the development of a web service aimed at simplifying the customers’ car selection.
In May this year we’ve reached a milestone in our used vehicle sales: the 4,000th vehicle was sold online via ALD Carmarket
since the launch of the bidding platform 3years ago. Considering our 8 years experience on the operational leasing market, this figure positions us as the main player on the market of used operational leasing cars.
Our focus in 2014 is to support the costsaving initiatives of our clients, consideringthe important role the car fleet spend plays.
We plan to further consult them on carpolicy optimisation avoiding the need tode-fleet. Taking advantage of themanufacturers’ latest technology anddevelopments in engine efficiency we haveencouraged a trend of fleet rightsizingrather than downsizing. Fleet managerscontinue to focus on lower CO2 emittingvehicles which address key corporate andfinancial values while also safeguarding HRconcerns by rightsizing the fleet andkeeping their drivers in the same car bands.
We expect this trend to continue next yearand positively shape the fleet operationalcosts for our customers.
Our current and future investments mainlytarget the customer care services, internalefficiency and strategies to improve ourcustomers’ TCO as we continue totransition through these difficult times.
We’ll carry on with our defensive drivingprogram organized in partnership with TitiAur, which after 2 years since its launch wasattended by 10% of the ALD Automotivedrivers and showed very satisfactory results:
40% from the drivers have improved theirdriving style by reducing damages, while thetotal number of damages declared beforethe program has decreased by 25% after thedrivers attended the courses. This programhas long term benefits regarding the fleetcosts optimization, securing road safety andprotecting the environment by assuming amore responsible driving style. For all ourcustomers in search of better car policieswe’ll continue to work even closer withthem by proposing them fleet rightsizingsolutions, CO2 reduction plans, andseamless measures to optimize their TCOand support their business needs. ALDGroup will celebrate a major achievementnext year, reaching a fleet of 1 mil. vehiclesworld-wide, and this will give us anotheropportunity to show our customers ourappreciation for their long term partnership.