2021 was a good year for operational leasing companies. COVID-19 for most companies has accelerated developments in respect of their mobility. Working from home, online client visits, commuting, paperless offices and digital signatures are just a few examples. But what are the effects of these changes for their business model? We have spoken to key department representatives of Business Lease Romania to get their reaction and an overview of operational leasing and car fleet management during this period.
Companies focused on their core business and outsourced all time-consuming, non-core related business activities
“Talking about our own business we were asked to consider 2021 to be a normal year in budget terms because no one exactly knew in 2020 how this year would develop itself. Looking back, we can only confirm that it was not just normal but proved to be an even better year. If we look at the evolution of our lease orders, the increase of our car fleet and the financial results. Despite the challenges caused by the semiconductors ‘crisis, we saw a 16% increase of the operational leasing fleet but also a 30% increase of the short-term rental fleet.What we did was reconsidering our strategy and simply adjust our solutions to the actual needs of our clients that required using their capital to respond better to these changes and as a result had to develop or reorganize their core activity. Furthermore, I believe that a stable, knowledgeable and enthusiastic team with a common objective was the key for our success in 2021, “explains a positive Oana Iancu, Commercial Director Business Lease Romania.
New car policies for employees
” Companies started seeing individual or personal mobility as a major benefit to increase the loyalty of their employees. More and more this resulted in an increased company car fleet to meet the needs of their key employees and more and more they understand the advantages of operational leasing services versus cash and internal fleet management now,” added Călin Avram, Financial Director.“Mobility is also crucial for HR. People were not so enthusiastic about public transport anymore and needed their (own) car to get around. That's why we had to come up with various products to help them. We saw for an example an increase in temporary rental projects and an adjustment of new car policies for employees (rent or even weekend pool car).” Mihaela Dragomir, HR Specialist.
Demand for Second-Hand Cars has increased
“Factory shutdowns starting in spring 2020 due to the coronavirus pandemic and occurring now due to a global shortage of semiconductor chips have caused the number of new vehicles available on the market to reach a record low.Because of the lack of these new cars and more and more delivery delays, people started to pay more attention to secondhand cars, more affordable than the new ones, especially those returning from operational leasing which have the advantage of trackability of repairs and damage, single owner, trustable mileages and extended warranties.In 2021, we sold 30% more cars to end-users compared to 2020 and improved our retail products such as an extended warrantee, financing and insurance products by almost 60% compared to the year before.” Georgiana Lefter, Supply Chain Manager.
High demand for rental services
“Opportunities came especially from services related to operational leasing, respectively short-term lease and rent. More and more companies, which preferred in the past to self-finance their fleet, were opened to discuss and consider the benefits of operational leasing. We had very good results last year on projects which started even 2- or 3 years back with companies that had thought they had enough capital to self-finance, but under the new market conditions were forced to change their strategy and invest in developing and reorganizing their core activity.” Oana Iancu, Commercial Director.“As a result, we had to increase the short-term rental fleet by 30% compared to last year, while the occupation ratio increased to an average of 96%.” Georgiana Lefter, Supply Chain Manager.
Operational Leasing and Fleet Management Outsourcing allow companies to better track and estimate their car management budget
From the maintenance and repairs perspective “2021 was a year with many challenges especially because of the increase of car prices as well as the turbulence on the insurance market caused for example by the situation of City Insurance. Also, a major challenge was the increase of repairs time caused by the lack of spare parts. All these raised a red flag for companies managing their car fleets themselves and I believe this was a huge opportunity for fleet management companies to prove their added-value for the correct monitoring and estimating of car fleet budgets, especially for commercial vehicles.” Mircea Ungureanu, Manager Customer Services & Products
Higher focus on client consultancy
” The semiconductor shortages led to historically low vehicle inventories but also record pricing and profits amid resilient consumer demand and the lack of available cars. On Procurement, the main challenge was to activate as many cars and to manage together with our dealers the delivery in time or with shortest delays as possible. If in the last 3 years the average delivery time was 2,5 months, nowadays we are at an average of 5 months, or even 8-9 months on some volume brands and models. So, the challenge was to fine-tune the orders (considering any production constraints), to optimize the delivery time or even to advise clients on choosing other car brands or models resulting in a quicker delivery time.Another issue which, unfortunately, had to be absorbed by customers were the car price increases and in some cases the inability of dealers to maintain the same price, even after the firm order was placed, something unprecedented so far.Despite the deliveries delays we successfully managed to activate the budgeted number of cars and even to overcome the order banks.” Georgiana Lefter, Supply Chain Manager“Work from home and remote meetings have been a challenge for the sales team especially for the new business. We focused on helping our clients to better budget their fleet renewals and providing them useful resources to better react to the changes in the market. We were happy to see that our commitment to stay close to them was acknowledged and rewarded reflecting in very good result in the Customer Satisfaction Survey in 2021 and a high response rate,” added Oana Iancu, Commercial Director.
The HR focus was on internal communication and digitalization
“Communication and maintaining a high level of involvement while working remote, hybrid or in shifts is a challenge for many companies during this period. We almost had to reinvent HR and bring it to the current high-tech challenges. But this also applies to keeping teams united. Therefore, we continuously had to organize internal activation events aimed at bringing people together and keeping everyone informed on the most important projects, we invested in a better HR software which provided colleagues with useful insights, without delays and in better online training. The management skills of managers have been challenged in this period and our colleagues had an important role in increasing and maintaining the morale of their teams and keeping them connected to the business. We also received good support from our regional HQ with projects at Group level that keeps us connected with the other teams within the Business Lease family and harmonize our messages among all countries.” Mihaela Dragomir, HR Specialist.
Sustainability was one of the buzz words in 2021
“After a very difficult 2020, last year was a hard reset for the automotive industry. There is definitely an increased awareness surrounding sustainability and people are more and more interested in finding solutions for a better and greener future.Overall carmakers and suppliers do know that they have to shift their focus and produce cleaner, more affordable cars. But they also need to re-evaluate the sustainability of not just their products, but of the entire mobility chain which includes manufacturers, dealers, suppliers, and after-market retailers. They and we all need to be on the same page for a greener, more sustainable future.” summarizes Philip Aarsman, Managing Director Business Lease Romania.This article was published by NRCC.ro.
