Now the dust has settled after GE Capital’s
restructuring process, John Jenkins and Gary Killeen tell
Jo Tacon what has
changed
It has been something of an eventful year
at GE Capital, and its fleet unit has been by no means an
exception.
Go deeper with GlobalData
The UK corporate finance business has been
thoroughly restructured as part of a global reorganisation of GE
Capital.
But General Electric as a whole is a company which
wholeheartedly subscribes to the belief that change is something to
embrace, and should be harnessed as a means to improve business
practices; change before you have to, as former GE CEO Jack Welch
famously said.
John Jenkins, the CEO of GE Capital UK since May,
is clear that the restructuring has left the business, and all its
divisions – from fleet, to equipment leasing, to invoice finance –
in a much stronger position to handle the challenges of the
future.
“Through 2008, we knew things were changing, then
Lehman Brothers was allowed to go to the wall [in September 2008] –
the news of that hit us like a bombshell. It prompted a wholesale
reappraisal of every business line at GE Capital: why are we
involved in this area? Does it make sense to us?” he says.
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By GlobalDataThe UK fleet division at GE Capital has been
relatively unaffected by the reorganisation, says Gary Killeen,
business leader at the unit – although GE Fleet is now focusing
exclusively on its larger customers (customers with more than 50
vehicles) while choosing not to expand upon the smaller fleet
contracts in its portfolio.
“Our larger customer strategy is now embedded, and
the fleet business within GE Capital was in fact slightly ahead of
the curve in terms of asking ourselves what customers we are
best-placed to serve,” Killeen adds.
Business finance in all its
forms
The reorganisation of GE Capital has been
carried out with the express intention of breaking down the walls
between its four core business finance areas: fleet contract hire,
factoring, equipment finance, and business lending.
This logic led to the disposal of GE Money at the
beginning of the year – “it didn’t add value,” Jenkins explains.
“We didn’t want to impose a new structure on our core businesses,
but rather we looked to simplify the structure, making it more
efficient and effective.”
Cross-selling is now easier, he adds: “We’re
already seeing a bit of an advantage, as people talk around the
coffee machine.”
Customers are now more aware of the breadth of GE
Capital’s business finance offering, Jenkins says, while the
decision to concentrate on large customers has only had a “limited”
impact on client numbers, to date.
“We have won some large [fleet] accounts, too,”
Killeen says, although he isn’t able to name names at this time due
to confidentiality reasons.
Cutting-edge technology
GE as a whole is a company with a strong
pedigree of technological innovation, and GE Capital is keen to
build on this legacy, says Jenkins.
“We have very strong fleet products, and we
launched our iQuote system five months ago, which has much more of
a ‘retail’ feel, while allowing drivers to make fully formed
decisions,” he says.
The fleet division is also leveraging the
opportunities afforded by the integration of the wider GE Capital
business through a “cross-fertilisation” of technology, Jenkins
adds.
Killeen notes: “For example, we have just launched
e-signatures for fleet customers, which we originally utilised in
the equipment finance business. It means that employee car
ownership schemes, which typically present quite an admin
challenge, can benefit from a fully compliant, fully digitised
e-signature, cutting the admin burden. In high-volume small-ticket
leasing, e-signatures are a vital tool, so we moved them over to
vehicle leasing too.”
Using technology to measure the effectiveness of
customer service delivery is another area that GE Fleet has
developed.
“A lot of driver interaction – around 70 percent –
is by phone, but with our corporate relationships, 70 percent to 80
percent is by email. To have a formalised metric to make sure that
we are responding in a timely fashion is key,” Jenkins says.
“We have also looked at using call analysis to
measure the quality of our telephone calls, in order to drive
efficiencies, and deliver cost benefits and enhanced customer
service.”
Defleet relief
The recent rise in trade values for
defleeted vehicles has come as a relief to GE Fleet, customers and
the market in general; meanwhile, a “more sophisticated” approach
to residual value-setting and channel development will aim to
ensure that optimum residual values and subsequent remarketing
performance are achieved, says Killeen.
“We are embracing some web-based sales technology,
working on the ‘if you like this, you might also like…’ principle,”
he adds.
Use of such channels for disposals has doubled in
two years, and is set to grow further. In addition, GE Capital is
piloting an own-vehicle sales system, based on epyx’s remarketing
IT platform, to offer cars to GE staff, and there is “no reason”
why such a service could not be offered to fleet managers among
their client base, too, he notes.
Fleet trends
Jenkins believes that, in the current
adverse economic climate, companies are looking to “unlock asset
value” – which has led to a rise in sale and leaseback deals.
“Cash-rich customers want to make tax savings, and
we have a unique product which can unlock the VAT benefit while
delivering cash savings,” he says.
On a wider scale, the recession has accelerated the
move towards outsourcing of fleet functions, he observes – even
more so than previous downturns.
“Costs are now front and centre for fleet
managers,” Jenkins says. “Outsourced provision is something that we
have invested in, as a result. We are looking to provide a wider
range of services to help fleet managers meet internal
challenges.”
As the fleet manager’s role becomes more strategic
than operational, with the leasing company partner there to do the
“heavy lifting”, Jenkins emphasises that the contract hire provider
must provide the data and information the fleet manager needs – in
a more sophisticated form than ever before.
“Data has to flow freely into corporate systems, or
a tailor-made dashboard,” he says. “You need to talk to customers,
as well, to find out exactly what it is that they want you to
measure on their behalf.”
The information provided by the fleet lessor also
has to be “more applicable”.
“The fleet industry has been guilty in the past of
pushing data rather than information. Nowadays you need the
dashboard interface, with data flows that look at overall trends,
and exceptions as well,” he says.
But full digitisation of the customer experience is
not the whole answer – “face to face is still vital,” according to
Jenkins.
The future of fleet?
In the immediate future, Killeen
identifies manufacturer lead times as a challenge to the industry,
and recommends early ordering to mitigate its effects.
“We’re talking a lot with our customers to find out
what their vehicle requirements are, as demand will start to return
at some point in the coming months, and we have to be ready,” he
says.
Killeen predicts that hard times will bring OEMs
and fleet operators closer together.
“It’s a very natural relationship, as we have many
shared objectives,” he says.
And perhaps customers and lessors will start to
take more of a partnership approach – as has been seen with some
equipment finance customers, Jenkins adds.
“Many large corporations want to share in the risks
and rewards in areas such as RVs,” he says. “As the vast majority
of them self-insure already, why should they fully outsource RV
risk?”
It’s an intriguing point – and indicative of the
wider changes afoot at GE Capital, and within its fleet unit.
