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100k and counting…

Lex Autolease will grow by 100,000 vehicles in the next five years, and it will do it in some pretty innovative ways, its new managing director Tim Porter reckons.

Porter has only been in the job for a few months, having come from the Lloyds Banking Group’s commercial banking sector, where he headed up the SME division for the last five years, and he reckons that the insight gained working with those customers gives him some advantages when looking for new business.

It also helps that after the turmoil of the recession, the forced marriage of HBOS and Lloyds TSB and the resultant super fleet of Lex and Autolease, the bank has given the leasing division the investment to expand.

Porter explains: ‘During that period the fleet size had gone down, as we got out of contracts that were not financially viable, the public sector downsized, some business was no longer there and some merged.

‘However, the group did a strategic review about two years ago which looked at which parts of the group offer core activities that are part of being a bank and would be long term investments. We came out of that very favourably.

‘So we are well regarded at the group level, but not just in financial terms. One of the exam questions was “is this business part of the solution to helping Britain prosper?”, and the answer for Lex Autolease was a resounding “yes”. So we have been given significant funds to power growth.’

Porter will not reveal the extent of that investment, other than with the word “millions”, but with a fleet size of 273,000 already, where is that growth going to come from, if not through acquisition? Porter reckons some of the usual suspects will be targets, such as winning business in mid-corporates, but he has grander plans to attract driver and firms that do not currently use leasing.

‘Most of the leasing companies, and I include us in that, have been set up for that mid-market where they are quite comfortable to do a bit of outsourcing, a bit of fleet management, and it is a big area where a lot of leasing firms are.

‘The Lex business is founded on the corporate sector but we have a relatively good presence in the large sector, and the same in the mids, but we have much more opportunity in the SME segment. Nobody has cracked the SME market yet. Clearly we do a lot of business with SMEs through our banking and we scratch the surface in leasing.

‘Within that sector we present ourselves in three different ways: brokers, branded and direct to customers and we think we can do more in all those channels, but the one with most potential is direct, and quite a bit of our growth strategy is founded there.

‘The question is how cost effectively can you service that market? We need to simplify the proposition – the interest is business vehicles, not fleet management, and some of it is price-led, but it has to be convenient, straightforward, and easy to understand and have no catches. I consider any customer currently buying a business vehicle to be my marketplace and we are a tiny percentage of that.’

Porter believes that Lex Autolease can help small businesses to grow post-recession, and his experience of the sector informs that.

He says: ‘As businesses come out of the recession, the propensity to borrow money is growing but companies tend to have destocked in the downturn to manage cashflow. So as things improve they have to borrow money to restock as they win new contracts, and then they find their track record is not great, and so sometimes that can be a lot for them to fund. Why would you want to tie up cash in that sort of period in vehicles? Yet lots do. That’s where we can help, by supplying vehicles to SMEs to allow them to spend their money on growing their business, and not on vehicles.’

The other area Porter expects Lex to grow is at the far end of the spectrum, in global corporate fleets. He says the firm has made significant investment in IT systems that allows it to manage international fleets on behalf of clients, with white label invoicing, websites and consultancy services.

‘So yes, we have a very specific plan that we would like to grow fleet by 100,000-plus vehicles over five years. It’s ambitious, but we have big plans and the group describes us as one of the jewels in the crown, so it is entirely possible.’