Vehicle leasing giant Leaseplan has been quick to spot the opportunity for growth available in the light commercial vehicle sector.

With the passenger car leasing market nearing saturation, the firm made a decision to step up its presence in vans in early 2011.

Mark Lovett, who heads up a five-strong team dedicated to the LCV business, says that, historically, Leaseplan had been very much a car-based company that also managed some vans.

“The culture wasn’t focused on the special needs of the LCV sector,” he admits.

So, in March 2011 Leaseplan established a specialist LCV division to focus on its four brands: Leaseplan, the corporate arm that deals with fleets of at least 100 vehicles; Leaseplan Go, which caters for SMEs with up to
99 vehicles; Automotive Leasing, the public sector and local authority department; and Network – a group of about 100 franchised brokers, that operates under their own names with Leaseplan providing funding and fleet management support.

Through a process of education and engagement with the commercial vehicle sector, Lovett claims Leaseplan has succeeded in changing its culture.

“We are now a car and van leasing company,” he says. “We are equally capable in both.”

Downtime management

Managing downtime is the main priority in optimising LCV operations, which is not always the case with car fleets. As Lovett explains, it is no use to a van operator if a service centre tells them they can have the vehicle back “a week on Thursday”, nor is it much good if they offer the loan of a car in the interim. Leaseplan launched its Uptime package in 2012. Through using telematics to proactively schedule servicing, Lovett claims the product can cut the time a van spends off the road by 60%. By capturing mileage every 24 hours, Leaseplan identifies when the vehicle will be off-road and finds the best-placed workshop, or mobile technician, to undertake the service.

Lovett says Leaseplan prefers to work with the manufacturers that are wise to the requirements of commercial vehicle operators rather than those that have a predominantly passenger car approach, which can cause problems further down the line, particularly when it comes to scheduling service, maintenance and repair. He says the brands offering dedicated LCV customer service are the best to work with.

Leaseplan’s customers expect the firm to reduce the administrative burden and to offer expert advice on how to reduce operating costs. Lovett outlines a variety of ways it does this. An important aspect is measuring driver behaviour. Vans are often driven by many different members of staff, making it hard to keep track of the state of the vehicle, monitor fines, manage fuel consumption and guarantee driver safety. Leaseplan offers a range of tools to manage driver behaviour. These include telematics applications for proactive vehicle management, tracking, fuel cards, and service packages to ensure that every van is regularly checked and inspected for roadworthiness.

Lovett claims Leaseplan is also often able to help operators cut costs by using its approved suppliers to reduce the weight of racking and storage equipment in the load bay. By leveraging its economies of scale, the firm is confident it can offer customers savings on both the base van and any ancillary kit specified.

The purchasing decision is key, and crucial questions for operators to consider, he says, are: “What is the van for? What is it carrying? And how heavy is the load?”

“What you’ve always had isn’t what you might need in the future,” he points out.

Leaseplan will advise customers which manufacturers and models it feels will best suit their needs. Diplomatically, Lovett says every manufacturer has vehicles with strengths in certain areas and it is up to the fleet management company to identify the ones matching the client’s requirements.

As well as offering more flexibility when it comes to the provision of servicing, the HGV sector is subject to far more rigorous duty of care and safety regimes than its light goods vehicle counterpart. But the pressure is growing on LCV operators to drive up standards, with Vosa signalling its intent to crack down on those that fail to meet their legal obligations.

“We apply an HGV philosophy to LCV fleets,” says Lovett. “Van operators cannot afford prohibition on their vehicles.”

Lovett maintains many SMEs do not have the resources to oversee legal matters, and contends that large fleets without a fleet manager are not equipped to deal with the intricacies of legislation either, so Leaseplan does it for them.

Size matters

Leaseplan’s LCV fleet now numbers 36,000 vehicles, having grown by 4000 since 2011. In the first 10 months of the year the van fleet grew by 4.4% compared with the firm’s overall fleet expansion of 1.6%. Commercial vehicles now account for 27% of the entire Leaseplan fleet.

Lovett claims the LCV numbers in the Leaseplan and Leaseplan Go divisions have grown by 20% during the past year, and the van fleet is increasing at three times the rate of the passenger car fleet.

“It’s driven by working with our existing clients and increasing our share of their fleets,” he says.

Now that the car market is “maxed out”, as Lovett puts it, Leaseplan’s competitors are starting to notice that the commercial sector has been expanding for at least two years. But he claims they are investing in sales specialists rather than in changing their culture to fit in with the working patterns of LCV operators.

“It’s easy to tell people you’ll manage their vehicles in a certain way, but you have to demonstrate the credibility of this and we are ahead of the game,” Lovett says.

Such is the success of Leaseplan’s move to establish a dedicated CV team two-and-a-half years ago that Lovett claims customers who were considering leaving the firm are now among its most enthusiastic advocates.

A key strategy in making Leaseplan’s LCV package popular with operators is its approach to end-of-contract damage – in a nutshell, it recognises the difference between car and van usage.

“You’re more likely to have minor damage on a commercial vehicle,” says Lovett. “We take a different view on what is acceptable wear and tear on a van – it is a working vehicle.”

He asserts that second-hand van buyers will also far more readily accept minor scrapes and scratches than used car buyers.

The economic downturn caused some customers to shy away from making outright purchases, according to Lovett, who says they wanted to be more creative with their budgets and therefore turned to leasing instead,
confident that Leaseplan would evaluate each brand’s products and choose the most appropriate model for their needs.

The company has recently extended its LCV coverage with the launch of its Appointed Converter Network. It will only endorse and recommend those bodybuilders that meet its criteria, which includes demonstrating financial stability, conforming to European Whole Vehicle Type Approval regulations, excellent build quality and competitive pricing.

With the firm’s reputation on the line, Lovett says: “The converters must see themselves as an extension of Leaseplan.”

Understanding the way operators run their businesses has been crucial in enabling Leaseplan to establish itself in the LCV sector – particularly in recognising the importance of keeping working vans on the road.

As the company says: “We treat vans as small trucks rather than big cars.”