The operational leasing market has increased by 13% at the end of Q3 2014 compared to the same period last year, up to 47,000 units, according to the information provided by ASLO - which is above the initial predictions. About 9,000 cars have been registered between January-September 2014 by the operational leasing companies, which means more than 1,000 units plus compared to the same period of 2013. Therefore, the market is back on the 2 figures growth track and there is estimation for a 15% increase at the end of 2014 compared to last year. The local market is evolving step by step and company managers begin to acknowledge the real benefits that come with operational leasing.
This is an opportunity; still, it is a continuous process and we need to put constant effort into educating the market and also to be proactive about offering useful services and innovations in this field. At the beginning of this year, we have conducted a market study aimed at identifying new potential customer segments by setting up their profile. The study results revealed new facts and, most importantly, provided valuable information about the profiles of new potential markets. For instance, more than 90% of our customer portfolio consists of international companies and it is interesting to see that there is a large potential on the market coming from small and medium companies, as well, which could represent a good customers base.
Operational leasing has a great potential on the local market - this is one of the conclusions of the previously mentioned market study, which we developed with Nielsen and whose results were published in September 2014. The study, whose purpose was to unveil the profile of the Romanian operational leasing client, brought us valuable information about why clients choose the operational leasing services, their current fleet structure, fleet acquisition methods, etc. The results show that full mobility is the most attractive and unique benefit of operational leasing. Other reasons for which companies choose operational leasing are: savings and cost reductions, predictability and budgeting of fixed monthly costs, the fact that they have no down payment and the elimination of the vehicle resale risk at the end of contract, which is undertaken by the operational leasing company.
In addition, corporate international rules apply to Romanian subsidiaries mandating for operational leasing. The participants in the study also responded to questions about the types of cars they have in their fleet and the age of the vehicles. Thus, 33% of the companies have cars of over 6 years, while 32% use cars of 3-6 years. 24% of the companies have cars of 1-3 years, while only 11% of the companies have bought their cars less than 1 year ago. The preferred car brands in the order of their penetration on the respondents’ fleets are Dacia, Renault, Ford, Opel, Fiat, Peugeot, Audi and others.
There are also challenges. We have faced several ones related to the instability of the legal environment, especially during last year: the limitation of the depreciation deductibility in the first 5 months of last year and the environment tax, which have had a negative impact upon the dynamics of the operational leasing market. A new challenge this year is represented by the elections, which we hope will not add more volatility to the existing economic and business environment. It is already a fact, in my opinion, that the “health” of the business environment is quite unstable.
Even though Romania has successfully seen an economic growth in the beginning of this year, in the second semester it suffered the biggest fall of all the European countries. In an insecure environment such as this, businesses cannot develop properly, while the main factors that should stimulate the economy are stability and trust. In the absence of these factors, businesses continue to face major issues with their day to day activities and also in their ability to create long term plans. We are transitioning through a difficult time right now and, with the elections, everyone remains cautious. Hopefully, in the coming short period we hope to see a new wave and a much needed revival after all this has ended and things fall into place with the new governance.
In what concerns us, we have had a stable and healthy, organic growth throughout this year, too. In the first 9 months, 52 of our customers renewed their vehicle fleets and so far this year we have added to our portfolio another 19 new customers, reaching a total of 262 companies of different sizes. Over 90% of our clients are multinationals and from a variety of industries like telecom, financial services, FMCG, construction, etc. Therefore, we have maintained a solid customer base with a healthy risk exposure. And, following our usual customer survey deployed at the beginning of the year, we were very pleased to find out that 90% of the respondents were satisfied and very satisfied with the ALD Automotive services.
In terms of fleet size, at the end of September, we have registered a very good growth of 7% of our fleet managed in full service operational leasing, which is our core product. At this point, 87% of our total fleet is represented by full service operational leasing contracts, while the rest of 13% is composed of fleet management contracts. Although we have ended the first semester of 2014 with a very healthy growth of 8.5% of our total fleet, due to recent de-fleeting of a few major customers, our fleet grew by 4% in Q3 compared to Q3 last year. Our prediction for the next three months remains positive and we are on the track of ending 2014 with a fleet close to 8,000 vehicles.
For the moment, we are working on establishing on the market the new products and services we have introduced for our clients, such as: the ALD mobile app, which helps clients identify and locate service suppliers and get in touch with our customer care team, the ALD carselector online tool, through which our customers can compare and select their cars among 4,700 multi-brand vehicles, and also our eco driving courses launched under the ALD bluefleet label in partnership with the Titi Aur driving school.
For the near future, we have in place new ideas meant to increase our product awareness nationally and we are continuously working with our customers to support them with solutions aimed at optimizing their fleet TCO and mobility. We are considering a series of CSR projects, mostly aimed at environment protection, which on one hand will answer the needs of our existing customers, while also enabling ALD to be in line with the trends from the more mature operational leasing markets. And we will of course keep investing in projects that will enhance our customer driving experiences and our operational efficiency. Due to the large number of vehicle users managed daily by our team - over 7,500 drivers throughout the country - we strive to put in place seamless processes and internal management tools – such as CRM, ALD res, etc. - that enable us to accurately and swiftly respond to their demands.