Customer comes first at Select Car Leasing

The broker industry has not enjoyed the greatest of reputations over the years, but that has been changing as companies expanded and merged to form larger, more professional organisations. The desire to attain membership of the British Vehicle Rental and Leasing Association was another significant catalyst to achieve credibility.

Select Car Leasing, which is celebrating its 20th anniversary, has come a long way since its inception in 2004. But one thing has remained constant: dedication to customer service.

In a sector suffering an image crisis, co-founders and joint CEOs Mark Tongue and James O’Malley were convinced customer service had to underpin the culture of their business from the outset.

Staff should “come off the phone knowing they have given first class service to the customer”, said Tongue.

Their business philosophy was honed while working at Reg Vardy in the Nineties. The dealer group was renowned for its commitment to outstanding service under the ownership of Sir Peter Vardy.

“That was the culture and looking after the customer is now second nature for us,” Tongue explained. “We have built our business off the back of referrals and second business.”

The Reading-based company’s values are epitomised by DRIVE – dedication, respect, integrity, value, excellence. They were set up to underpin both internal (colleagues) and external (customers) parts of the organisation.

Breaking through 100,000 vehicles

Select Car Leasing is now one of the biggest broker businesses in the UK, with 86,000 vehicles on the books and employing 240 people. Tongue is confident of adding another 15,000-20,000 vehicles this year, taking the company above the 100,000 benchmark for the first time.

Buoyed by an injection of funding from new partner Mobilize Financial Services, which has taken a 36.6% stake in the business, with Tongue and O’Malley owning 15% of the newly named Select Lease by Mobilize leasing company, Select Car Leasing is bullish about its longer-term growth opportunities.

O’Malley said: “We had successfully grown the business each year since 2004 and were looking for investment to take us to the next level.”

Tongue added: “We were growing at 18-20% year-on-year prior to Covid but then it stagnated. But we are ambitious, and we want to accelerate our growth; we are just scratching the surface.

“Covid halted talks but then we were approached by Mobilize Financial Services (MFS). It is a fantastic partnership for us – it elevates us as a brand to be taken more seriously.

“They also have the skills to help us understand the fleet market and they have services, such as Bipi subscriptions, that we are keen to work with to maximise the opportunities.”

Select Car Leasing will continue to operate independently, with no change to its day-to-day operations other than adding MFS to its panel of funders, which includes ALD/LeasePlan, Arval and Santander.

“It is imperative that the relationship worked for both parties,” said O’Malley. “We have a similar philosophy and work ethic, and we are both looking for growth.”

Select Car Leasing brings to the partnership its knowledge from multi-marque leasing and its expertise of working with a panel of funders which enables it to secure the best rates. In addition, its website and user experiences has resulted in a highly rated portal journey.

Appointed representatives

Supporting the main broker business are nine appointed representatives which widen Select Car Leasing’s nationwide coverage and enable it to fully exploit the high levels of interest it creates via internet searches. The representatives account for around 25% of its total business.

“We generate a massive amount of enquiries so there was an opportunity to bring into the business people with a level of skill who we could indoctrinate into our culture,” said Tongue. “That’s why we work with small brokers as appointed reps.”

O’Malley added: “Broker business forms the majority of business some funders are doing. The industry now has credibility.”

They have identified two growth priorities: vans and business contract hire. The former account for just 6-7% of the fleet but Tongue hopes to lean on the support and knowledge of its new investment partner, as well as Renault and Nissan.

Business contract hire is also a minority market channel, accounting for 32% of the fleet versus 68% personal contract hire but it is taking around 40% of new business.

“SMEs are a big opportunity, especially around electric vehicles – everyone is looking at that changeover,” Tongue said.

“With the unknowns on residual values and battery length, leasing is a perfect foil.”

In 2019, it set up Select Electric to broaden support and advice for electric vehicles, with discounted home chargers, solar options and offers including 8,000 free miles in association with OVO Energy on selected models. The division was expanded in 2022 with dedicated EV teams and new tools such as fuel cost calculators.

Interest from the retail market is rising, helping to push full electric and plug-in hybrid to a 34% share of cars supplied by Select Car Leasing this year. Within the mix, BEV dominates.

“The majority have made the jump straight from ICE to BEV,” Tongue said. “It’s surprising more haven’t taken PHEV first, but it’s down to the conversations with our team, the myth-busting which encourages them to go for full electric.”

Shared ownership and used car leasing

Both men believe there are plenty of opportunities to broaden their product portfolio into new areas. O’Malley suggests a future proposition could be for part ownership of vehicles, built out of hybrid working patterns, where one person might only have the car to go to the office on a Monday and Tuesday, for example, with someone else taking it for the rest of the week.

A more immediate opportunity is to get into used car leasing.

“We’ve had a couple of funders approach us that have done second life funding which has brought new people into the market,” said O’Malley.

Tongue added: “It offers the chance to write the residual value risk over a longer period of time. We are excited about that and Select Lease by Mobilize also sees an opportunity to get involved in ex-lease vehicles.”

Electric vehicles are perfectly suited to second and even third life leases with many having 10-year battery warranties. Spreading the RV risk could also make the first lease more competitive, while attracting a younger demographic with the used car proposition, O’Malley believes.

“We are looking at 10-year residual values on electric vehicles not three years, so we write it off over a longer period by releasing,” he said. “A lot of companies are looking at this.”

With relationships with most manufacturers, the company sees a natural ebb and flow in supply volumes depending on individual brand priorities. Chinese brands are the next opportunity, with buyer interest still embryonic but growing.

“They are aware of the broker market, and we have met with them directly and remain in talks with those coming to the UK,” said O’Malley.

Select Car Leasing enjoys solid retention levels of around 44% of renewals, which is higher than the industry average, according to Tongue. Some of the losses are down to people no longer leasing or returning to a company scheme, as well as competitor gains.

However, he has set an ambitious target of 75% as the company moves more into the corporate market.

“We are on the journey to make Select Car Leasing a household name,” said Tongue.