The big moves in leasing and long-term rental pose as many problems as they solve


After the reorganisations carried out by Stellantis following the merger in the organisation of the leasing and financing activities concerning its 14 brands in the different countries, it is the acquisition of LeasePlan by ALD that made the headlines at the beginning of 2022. Beyond the desire of all the major operators to sit at the very attractive car leasing table, the question of how to manage this dossier and what real advantages size represents in this respect remains.

Negotiations between Société Générale, its subsidiary ALD and the Dutch leasing company LeasePlan, which have been ongoing since the autumn, came to a conclusion last week and the merger of the two operators was announced: ALD will acquire 100% of LeasePlan's capital for a total of 4.9 billion euros, paid in cash and shares.
The transaction will be completed by the end of 2022 and the objective is for the new entity, called "NewALD", to be fully operational by 2025. Of course, the press releases try to convince us that the merger of two operators, one managing a fleet of 1.8 million light vehicles and the other a fleet of 1.7 million, into a single entity will create value. In addition to the synergies and savings traditionally announced in purchasing and the back office, the credo is that the complementary nature of the expertise and territories in which the two players operate will give them the weapons to "accelerate the digital transformation of the automotive sector, to accompany the evolution of customer needs from vehicle ownership to vehicle use, in all segments: B2B, B2C and B2E, and accelerate the energy transition of companies towards low-emission and sustainable mobility solutions".

The conviction of bankers and, in particular, of Frédéric Oudéa, head of Société Générale, seems to be that, in a world of very low interest rates, it is no longer enough to "distribute credit" through different channels and for different customers and that it is now necessary "to be able to think in a slightly disruptive way about new ways of doing business". He added: "Why not explore new businesses just because we are a bank?" He presented ALD and its acquisition of LeasePlan as emblematic of this strategic vision which will make the new entity the "leading player in mobility solutions".

The economic press readily subscribes to this vision and takes for granted the idea that we have already moved from ownership to use and are now preparing to move to subscription formulas including different services delivered by the same operators. Electrification would accentuate the phenomenon and give mobility solution providers the capacity to create and capture a very rapid and sustainable growth in value.

This is a bit of a leap. The transition from traditional credit to formulas of the LOA type is first and foremost experienced as a new way of financing the purchase of "one's" vehicle: it is not because the registration card mentions the lessor and not only the user that the vehicle is experienced and managed in a different way. Very low interest rates, high residual values and the interest of customers in offloading the risk of these residual values (for both diesel and electric vehicles) onto the financier have given (and continue to give) a boost to leasing and leasing. Does this mean that we have stopped buying cars and are now only looking to acquire a multi-modal, carbon-free mobility service? We can hope or imagine that this will one day be the case. However, this is not the case today: in companies, we know that all forms of 'pooling' of fleets of service or company vehicles pose serious 'B2E' (for 'business to employees') management problems; as for households, the vast majority of them continue to think of themselves as owners of their vehicles.

In the same way, for both manufacturers and leasers, the "digital transformation" of the car trade and services and the capacity it would give to free themselves from traditional networks and their ability to sell vehicles and/or "mobility solutions" are probably largely overestimated. With regard in particular to the capacity of the major banks to become the preferred contacts for households wishing to purchase new or used vehicles via a LOA type formula, the existence of sites developed by Arval, Cetelem, ALD or LeasePlan only covers a very small part of the range of behaviour and needs at the time of purchase and generally does not make it possible to cover, by means of a quality local service, the needs associated with the use (maintenance or repair) of vehicles.

The belief in "all-digital" to "disrupt" the traditional ways of dealing with the automotive issue is most likely to be an illusion for a long time to come (if not forever). Since this requires partnering with distributors and sharing value with them, it limits the benefits of forming very large groups that deploy the same offerings available on central platforms to all customers. In other words, the expected economies of scale are probably greatly overestimated.

In fact, in parallel with this mega-operation which, after those undertaken by Stellantis with Crédit Agricole, BNP Paribas or Santander, it should be noted that Crédit Agricole and BNP have in a way admitted that they cannot manage BtoC with their tools and their branches alone (which they are moreover eliminating in droves). BNP Paribas/Arval announced in October that, from February 2022, Emil Frey would market Arval's long-term and medium-term rental offers under the Autosphere Lease brand. At the time, Hervé Miralles defended this partnership by declaring: "At a time when customers are looking for high added value offers combining advice, proximity and innovation, Autosphere Lease will be able to meet their expectations.

In a similar vein, Crédit Agricole, which intends (in partnership with Stellantis in particular) to catch up with Société Générale and BNP Paribas in the field of car leasing, also indicated shortly before Christmas that it was taking stakes in the new holding company Cosmobilis around which the BymyCar group is reorganising its activities.

These moves indicate that the changes underway cannot be summed up by clichés such as digitalisation, electrification or the shift from ownership to use. The realities are more complex and require the maintenance and renewal of an ecosystem that is fortunately more complex than the one described by the press releases of large companies that are merging or signing partnerships.



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