Nigel Stead of Lex Autolease talks to Jo Tacon about bringing
together two businesses to create the largest fleet operator
in the UK
Go deeper with GlobalData
When Motor Finance catches up with Nigel
Stead, he is at the airport in Stirling, after a busy day at Lex
Autolease’s office in the Scottish city, holding workshops and
Q&A sessions with staff.
Stead has had a lot on his plate ever since taking
on the role of managing director of the newly-minted fleet
behemoth, formed from the fleet companies Lex and Lloyds TSB
Autolease, thanks to the merger of their respective parent banks,
HBOS and Lloyds TSB, in September 2008.
“We’re six months into an 18-month integration
process,” Stead says, “which we hope to complete by the end of
2010. We’ve achieved a great deal but there is still an awful lot
to do.”
The migration of all vehicles to one IT platform
is, he says, a current priority: “It’s the key to success, although
there are many other tasks to get right as well.”
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By GlobalDataAfter an evaluation process which Stead insists was
entered into with “no preconceived ideas”, it was decided by the
lessor’s management team that Lloyds TSB Autolease’s Connect IT
platform would be the “most suitable”, he says, adding that “we
simply wanted to ascertain which would be the best, for the company
and for our customers.”
Having decided on a platform, the next task is to
carry out – over the next 12 months – so-called “transition drops”,
whereby entire customer segments will be moved over onto the
combined system.
The first such segment to be moved over was the
broker business, as it was “technically the simplest, thanks to the
similarities between the Lex and Autolease legacy broker
businesses,” Stead explains. The broker IT switch was completed on
schedule, on 1 November, he adds.
Customer care
Stead’s primary concern is, he says,
ensuring that continuity of customer service is maintained, with
clients not even noticing any change as a result of the merger.
“The reaction [from clients] has mainly been one of
great interest, and our customers have been generally supportive,”
he observes. “Of course, any scale of integration will provoke
nervousness, but we are determined to minimise this.
“We’re determined to carry out a seamless and
invisible integration, from the customer’s point of view. Whatever
internal issues we have, we will ensure that customers are
protected from that, while our aim as a fleet company is to remain
innovative, dynamic and customer-focused.”
There is a risk, Stead acknowledges, that the
creation of such a large fleet – with over of 300,000 units, Lex
Autolease dwarfs its nearest competitor, LeasePlan, with 122,000 –
could create a perception that customer service will suffer as a
result of the company’s sheer scale.
“There’s no doubt that our scale makes us unique,
but I would very much like to believe that our scale will bring
benefit to customers and colleagues, as long as we leverage it
correctly. Our size itself is not the issue. I am sure we will be
able to maintain and improve customer service levels,” he argues.
“Customers don’t really care about the scale of their fleet
supplier – they care about products, innovation, competitive
pricing and so on.”
Harmonising models
More than just IT needs to be put onto
one platform, Stead points out; the two fleets’ remarketing
strategies were, pre-merger, “similar but different”.
Lex put all its defleeted vehicles through
auctions, and had a sole-supply auction house partner in the form
of BCA; Lloyds TSB Autolease used dual source auctions, but also
operated two wholly-owned retail sites, one a super-site off
junction 2 of the M5 run under the brand of Black Horse Car Sales;
the lessor also sold a small proportion of ex-lease vehicles to
drivers, to bank staff, and directly to consumers over the
internet.
It is the Lloyds TSB Autolease model which has been
retained, Stead says, with non-auction disposal routes to be
nurtured and developed over the coming year, and beyond. He
emphasises, however, that auction remains a vital and viable
disposal method for the majority of defleeted vehicles.
“Overall, 2008 was difficult [on the residual
values front] but the rather unexpected recovery in used car prices
this year has helped us, and, ultimately, our customers. Whether
RVs continue to rise is, however, much more of a fraught question,
and in our internal planning we are predicting a small further
decline, before an anticipated turnaround in 2011,” Stead comments.
“But at the end of the day, the financial outlook on a national,
corporate and individual basis looks challenging. Taxes are going
to have to rise, and the economic recovery, when it comes, will be
long and slow.”
Coming challenges
The next year will be a busy one for Lex
Autolease, Stead predicts, adding that this is “a good thing”, as
“we can’t afford not to have enough on our plate.”
He says: “Unless we continue to be proactive in
developing products and services to meet our customers’
requirements, we will not succeed to the level that we want
to.”
Nigel Stead, Lex Autolease
The current business environment is “the most
challenging I have ever known,” he notes.
And not just from a macroeconomic perspective; many
other issues are vying for his attention.
“With the ongoing health and safety focus, and
environmental issues, customers rightly look to their fleet
supplier to provide them with help and solutions. Our challenge
will be to help our customers navigate through these issues, while
at the same time helping them cut costs,” Stead says.
The green agenda and duty of care/health and safety
are “very much the focus of the business in 2010,” he adds;
meanwhile, Lex Autolease is working on a new whole life cost model,
which will be unveiled in the new year.
But the depressed economy has at least brought some
benefits to fleet outsourcing companies, as it has encouraged many
companies in the hard-to-crack SME market to consider the rewards
to be gained from handing over fleet procurement, management and
disposal activity to a third-party provider.
“Customers that had not previously chosen to lease
are at least considering it,” Stead notes. “There’s clear evidence
that more and more companies are looking at it, as a way of
addressing costs and outsourcing the complex area of fleet to
experts, and we are extremely well placed to benefit from this.
“Capital [for all fleet companies] is more scarce,
but we are extremely fortunate to have a supportive shareholder
that will help us grow the business in the future.”
Having the state as a minority (43 percent)
shareholder has not caused any changes to internal operations,
Stead insists, and has not even helped Lex Autolease win public
sector business – “the government has to be, and has to be seen to
be, absolutely straight when awarding contracts and the like”.
Bad debt levels among customers in the small
business sector have risen only “modestly”, he says, while
underwriting has tightened, inevitably, but not to a level where
standards are “unrealistically careful”.
Stead says: “It does neither customer nor lessor
any good to enter into a mutually unbeneficial situation; we’re
clearly operating in a changed credit environment, and have to
adapt to that.”
Adaptability in all areas is an absolute necessity,
Stead believes, along with strong lines of communication to staff
and customers.
“We’re in a rapidly changing business and must
acknowledge that. Is it tough? Of course it’s tough – but we have
to adapt, and the prize will be good for customers and staff
alike,” he concludes.
