By Janice Sutton
Q. Tell us about the trends you are seeing in the industry right now.
A. In the United States, I think we are seeing a lot of consolidation within companies to form a global fleet policy and a global fleet single source.
When I started the global initiative at GE five years ago, there were one or two companies that were looking at fleet from a global perspective. After the financial crisis, the companies started to see fleet as a large line item on the P&L and started investigating exactly what fleet was and deciding that they needed to centralize it, give somebody ownership of it, and make sure that person understood the costs.
So, we have seen more global fleet managers named within companies over the last three years than in any other time in history. We are seeing a consolidation within each of our customers under a single person’s ownership of their global fleet policy and products.
Q. It seems that we have come a long way with respect to global awareness. Fleets are now seeking one company to be their global fleet provider. What are they asking for?
A. Over the last six months I have probably been asked at least a half a dozen times: we would like you to be our global fleet provider whether you are in that country as GE or whether you are not. So, it’s not just we want your money and your services, we want your guidance. We want your ability to tell us what we should do in Argentina, Chile, the Middle East or Africa. What should we do? We understand that you might not have the financing capability but we want your brains and we want your advice and, most importantly, we want your analytics. The use of analytics has become almost a ticket to play. If you can’t analyze the data, the companies are sitting there saying: what good are you?
I learned a long time ago that anybody can answer the question: what is the number? It is the good fleet management company that will answer the question: why is it the number and what can we do about it? The ability to save money on a global basis has become a very strong key performance indicator over the last two to three years.
Q. What are some of the issues that your global clients are concerned over?
A. Data gathering. The one thing we have heard numerous times is: how do we get the data to one central point and then how do I analyze the data? Privacy laws in Europe prevent the significant amount of personal data to be transferred to a single source outside the company and outside the country. As we are building dashboards we have to be very aware and cognizant of the privacy laws in Europe. The structure in Europe does not allow for complete and detailed transparency.
So, as far as the data gathering, the next phase is – well, if I do get the data, what can I do with it? The closed end lease in Europe is a bundled service and having that data broken into its components to see how best to manage each of those components has become a pain point for a lot of customers.
We are hearing a lot from the larger more aggressive companies: we would like to have more transparency in Europe as we do in the United States. I think there is a trend going forward to address what the European market can do to modify its closed end lease, to give a little more transparency to customers so they can do analytics and decide how best to manage their fleet.
Q. Do you see that this is going to be easy to do?
A. I think there are two questions there. As far as still providing the compensation vehicle to the employees, I think that is easy to do. If you allow the employee to maintain the same class of vehicle, like a C Class Mercedes or a Jetta, it doesn’t matter how your company is paying for it. But if companies start changing the class of the vehicle so the employee is moving from a C Class Mercedes to a car that is not in that same class, that is when the workers’ councils will start getting involved.
From the company’s point of view, they just want to know they are paying for services that their employees require. They don’t want to pay for five sets of tires if they are only going to use two. They don’t want to pay for 150 thousand kilometers of wear and tear if they are only using 80 thousand kilometers. I think that from a driver’s transparency point of view, as long as they are driving the same class of car I think they are completely onboard with whatever the company does.
As far as the company is concerned, instead of paying 750 euros, if they know exactly what goes into that 750 and they have the ability to reduce that to 640 or 600 euros, I think that is where the trend is going in Europe.
Q. If you were advising fleet managers who have just been given responsibility for vehicles outside of the U.S., what would you tell them?
A. The first thing they should do is ask a lot of questions internally. Who is responsible? Who has authority? What do we give to employees in each country? Each country will be different. Educate yourself internally first. Do not go out too far over your skis. Learn what you have now and then talk to other global fleet managers. Ask your fleet management company – who is a new global fleet manager? Who has just been given this responsibility over the last six months and who has had this responsibility for five years? Reach out and talk to them.
One thing I have found with global fleet managers is they are very friendly, they are very open, and they want to help you. So use NAFA, use your fleet management company, network as much as you can to learn what others have been doing in the space. It will save you a lot of time, it will save you a lot of aggravation and your education is your first step.
Then start talking to your fleet management company and reach out to other fleet management companies. We talk to and help the customers of our competitors all of the time. It is a very long process so that something that you do now may pay benefits to your company and the fleet management company in two or three years. So, be friendly. Your competitor’s customers may be your customers in two to three years. Develop rapports with all of the fleet management companies and all of the people in the business.
Q. What do you advise your clients whenever you are dealing with an area that is in trouble?
A. The macro-economics of Europe are what they are and the euro was 135 compared to the dollar and now it is almost parity. It is becoming less expensive for U.S. multi-nationals as they are looking at their European fleet.
I have rarely found in the developed countries that the macro-economics of a country do much for the fleet business other than reduction in force. So, we do see reduction in forces when there is a major economic swing in a various country. But as far as the fleet business, it is a topline business. It is primarily sales vehicles; you have to generate revenue; and it is primarily service vehicles; you have to service the customers. So, the macro-economic swings in Greece or elections in the U.K. don’t really affect the fleet business as much as other businesses.
When you move to developing countries, it is difficult. You are playing in a field that is difficult to very difficult. So, it is not moving from difficult to easy. It is just a difficult process and in most cases customers buy vehicles versus outsourcing them in a lot of countries. We saw a lot of statistics on the percentage of outsourced vehicles versus purchased – it is very small.
We get calls all of the time for five vehicles here, six vehicles there and we just say, “We really can’t help you.” I think a fleet management company really needs to be honest and say it is not our core competency to finance and manage a vehicle in that country and we advise either a purchase or an in-country financing from either a bank or a dealership, or talk to your OEM. It is just not something that an FMC is going to set up bricks and mortar in a country that they are not going to get their return on for 30 or 40 vehicles a year.
Jeff Schlesinger is Managing Director – Global for GE Fleet Services. He joined GE in 1996 and managed the Capital Markets’ Structure Products Group, oversaw global water desalination projects, structured cross-border M&A transactions and is currently spearheading GE Fleet’s global initiative. Prior to joining GE, Mr. Schlesinger managed the leasing group at WestLB and was the head of lease syndication for CIT and Chase. He received he BA in Economics from Georgetown University and his MBA in International Finance from the University of Chicago Graduate School of Business.
