welcome to the 2013 FN50 Annual Dinner, the night where we reveal the top 50 contract hire and leasing companies of the year, plus so much more in our comprehensive Fleet News FN50 report.
My thanks to Sewells Research & Insight and its research director John Maslen who collated and crunched all of the data for this year’s report.
As ever John, together with the Fleet News editorial team, has worked tirelessly to ensure the FN50 is the most accurate, insightful and important piece of research into the UK leasing sector.
It accrues and analyses data that is unavailable anywhere else to produce a report which gives useful information into the country’s most reliable vehicles, the best franchised dealer networks, average CO2 emissions, wear and tear costs, and the challenges facing fleets and leasing companies over the next 12 months.
This year, we’ve added analysis of leasing company profitability and we’ve delved into the dark arts of setting residual values, assessing the accuracy of re-sale prices and sold-first-time ratios.
I also need to thank our FN50 sponsors for their support.
Firstly, our FN50 headline sponsor Skoda UK and its new head of fleet sales Patrick McGillycuddy.
This is the fifth consecutive year that Skoda has sponsored the FN50 and your support is hugely valued and appreciated.
Thanks also to our eight FN50 associate sponsors:
- ARI Fleet
- Autoglass
- Autorola
- FMG
- Hankook Tyre UK
- Total Accident Management
- RAC
- And… Shell
So after six weeks of intense research and checking of figures, we come to this point.
And there’s good news to report. For the first time in five years, the FN50 has grown in size.
Despite the doom and gloom following the recession and painfully slow recovery, the contract hire and leasing sector has shown a robust performance by adding more cars and vans to its risk fleet.
The increase may only be small, but it’s a significant reversal of the trend which started in 2009.
And at 1,247,126 vehicles, it’s the biggest FN50 since 2010.
A year ago we noted how risk fleet cars had risen marginally while the number of vans had fallen for the second year in succession.
Well this year, the number of vans funded by FN50 companies has increased, by 3% to 268,278.
Both leasing companies and fleets are reporting a clear movement away from outright purchase on light commercials towards contract hire so this growth is not unexpected.
In addition, van registrations are up this year by almost 10% compared to 2012. Driving much of this growth are van fleets operating in the home delivery, retail and logistics sectors.
Risk fleet cars, meanwhile, have risen for the second consecutive year, strengthening claims that the nadir for the decline in company cars has not only been reached but surpassed.
However, the increase is extremely slight: just 158 cars, taking the number to just under 979 thousand.
Of the 50 biggest leasing companies, 36 have increased their risk fleet size year-on-year, including eight of the top 10.
The two exceptions here are Arval - although it is targeting significant growth over the next couple of years - and Mercedes-Benz.
Mercedes-Benz is also anticipating growth. It is one of an increasing number of manufacturers to stretch out into a multi-branded funding offering.
Earlier this year it signed an agreement with Leasedrive, which will enable it to offer rival brands through its leasing arm.
A similar move to offer all-makes funding has been taken by Toyota Financial Services with the launch of Multi-Marque.
Being able to provide funding only for Toyota and Lexus models had been a “barrier” to winning business, according to the company.
This year’s FN50 is one of the most stable in years, with just two new entries.
Van specialist Commercial Vehicle Solutions comes in at No46, while Kendall Cars also makes a first-time appearance at No49.
The two newcomers replace van and HGV specialist Fraikin and Lombard Vehicle Management – the latter, as you know, began exiting the sector last year.
During the course of the past 12 months, the Fleet News team has visited and profiled many leasing companies, casting light on their future growth aspirations.
For a number of companies, those plans centre on becoming an FN50 top three or top five organisation.
And our conclusion is that someone is going to be disappointed.
Arval, ALD and Volkswagen Group Leasing all hanker after one of the places currently filled by Lex Autolease, LeasePlan and Alphabet, while Hitachi is targeting a place in the top five.
However, none of the top three leasing companies intend to vacate their position – they have all increased their risk fleet size this year, consolidating their standing in the FN50.
So, six into three doesn’t go – well, actually, it’s more like six companies into two places because no-one is going to overhaul Lex Autolease any time soon.
Lex Autolease remains more than twice the size of LeasePlan, its closest rival.
And, for the first time since the company was created in 2008 from the merger of Lloyds TSB and HBOS, Lex Autolease increased its risk fleet size.
Between 2008-2012, its risk fleet size fell by 28% or almost 104,000 vehicles. Some of the reduction was intentional, some was unplanned.
This year’s rise might only be a modest 1.85%, but it is hugely symbolic.
And more is to come, according to the man now charged with running Lex Autolease, Tim Porter, in a recent interview with Fleet News.
Elsewhere, notable year-on-year growth came from BMW-owned Alphabet which appears not to have suffered the large-scale integration issues experienced by Lex Autolease following its own major purchase, of ING in 2011.
However, the greatest volume growth has come from Hitachi Capital Vehicle Solutions, which increased by almost 13,000 vehicles year-on-year. Almost all of this came from risk fleet cars and much of it was a result of the acquisition of 9,000 vehicles in a deal with Lombard.
The two PSA leasing operations, meanwhile, have had contrasting years. While Peugeot’s risk fleet fell by 9%, Citroen Contract Motoring grew by almost 30%.
Citroen Contract Motoring has not followed the manufacturer trend towards multi-brand leasing – it offers finance only for Citroen products.
This makes it difficult to penetrate larger fleets, which means the majority of its business is with SMEs. But it is clearly succeeding, particularly on cars where much of the growth has come.
Stability in FN50 members has not translated into stability among the directors responsible for those businesses, at least not in the top 10 where six leasing companies have new men at the helm, notably Tim Porter at Lex Autolease, Mel Dawson at ALD and Benoit Dilly at Arval.
Outside the top 10, a further three leasing companies have seen a change of boss.
New men with new ideas: could we see a change of direction among some of the market leaders? It’s a question that we will revisit in the 2014 FN50.
In this year’s FN50 report we take a look at leasing company profitability for the first time.
We found that business confidence is rising as profitability has shown steady improvement over the past four years.
The majority of leasing firms are also bullish about future growth in profitability.
Total turnover of the FN50 is around £4.7 billion and combined pre-tax profits are £600 million.
Figures from Companies House show average pre-tax profit margins among FN50 companies have grown from 5% in 2009 to 7.8% in 2012, the last full year for which accounts are available.
These figures provide a broad economic overview, as they include all aspects of a company’s business, from core leasing revenues to added-value services such as daily rental, accident management and even vehicle tracking.
They also hide a wide range of profitability, with some companies achieving in excess of 12% margins, while others report pre-tax profits of 2-3%.
The overall figures suggest a long-term improvement in the financial health of FN50 companies, and there is every indication that this improvement will continue, based on latest economic data.
You can find out more on this in the FN50 report which will be handed out after dinner.
Now, though, it’s time to spot your company in the top 50 as we show for the first time, the 2013 FN50.
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