The boundaries between pure fleet and pure retail sales in the European automotive leasing market are blurring as the two markets increasingly converge, global fleet and leasing software provider Sofico has said.
Sofico found that captive or manufacturer-owned finance companies had been increasingly turning their market attentions towards corporate fleet customers.
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"In a bid to increase their share of the corporate fleet market, they often bypassed some of the more traditional routes to market by going direct. Many are now launching full service lease products aimed at fleet owners or putting a renewed focus on their existing finance and lease offerings, targeting mainly small fleet owners and sole traders," Sofico said.
The software provider also found that international leasing companies had not only been focusing on corporate customers but individual drivers themselves, designing and developing a range of products aimed specifically at the individual.
"By targeting private individuals in this way, multi-brand leasing companies are now expanding beyond their traditional business2business (B2B) market into the retail business2consumer (B2C) space and are also targeting the broader employee base of their corporate customers – a trend Sofico has labelled as business2business2employee (B2B2E)," the company wrote.
Sofico said that private leasing has become more prevalent across Europe, especially in countries like the Netherlands and Belgium.
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By GlobalDataWim Bauwens, sales and marketing at Sofico, said that this increasing market convergence is altering the systems’ requirements of many leasing suppliers.
Bauwens said: "In an increasingly converging market, both multi-brand leasing companies and captive finance companies run the risk of maintaining two portfolios of customers in two separate systems and duplicating a considerable amount of effort.
"It is far more efficient and cost-effective to manage all contracts, regardless of retail or fleet, B2C or B2B, in one system to ensure a good customer experience, to avoid duplication and reduce the errors that this can cause as well as maximising opportunities to cross-sell and upsell.
"Current retail systems are good at processing and managing high volumes of individual contracts, but traditionally these are for a simple finance product without any additional services.
"Fleet systems, on the other hand, are good at managing complex products, such as full service leasing with finance and an abundance of different of services, but don’t have the same operational efficiency or scale of retail systems.
"To manage both portfolios of contracts in this new converging market on one system, you need to add the complexity of operational lease products to the retail software system or you need to add the efficiency of a retail software offering to the fleet management system."
