The head of Europe’s largest car rental group is betting that scale will help his company weather the impact of rising interest rates on the industry.
Societe Generale-controlled ALD completed its 4.8 billion euro takeover of rival LeasePlan last week, at a time when its rivals in Europe are also looking to add to their fleets, partly as they try to cope with rising interest rates and inflation.
Customers – both companies and individuals – have been holding back as costs rise and real revenues fall, but ALD chief executive Tim Albertsen argues the merger will help the group overcome a more unfavorable car rental environment.
“People are looking at monthly rents (leases), of course that’s because of high interest rates and inflation – but we’re competitive in that space, especially in this deal,” Albertson said, referring to It’s the merger, and ALD’s ability to try and keep rents low.
“We’ll be buying 800,000 to 900,000 vehicles a year . . . we’re a great partner for all the manufacturers, and with the discounts we get and the efficiencies of our systems, we’re also obviously competitive in terms of pricing.”
Albertson, who will continue to manage the enlarged group, said higher rates would not ultimately reverse the shift to leasing rather than buying vehicles, especially as the company tries to improve its environmental credentials with electric fleets.
The industry’s growth has been fueled in part by consumers and companies’ desire to test electric vehicles, broadening the field of potential customers that used to be more limited to large corporations.
“If you go back to 2008 and the Great Financial Crisis, and the liquidity crisis of 2011-2012 and other crises, like Covid, we’ve been growing — mostly because there’s been structural growth in this market,” Albertson told British “Financial Times”.
However, he said demand from small and medium-sized clients and individual consumers was weaker than the group had recently expected.
“This market will come back,” Albertsen said, adding that rivals are also interested in the space, from automakers to other companies such as BNP Paribas, which owns Arval’s leasing business, and France, which has a leasing joint venture with Stellantis. Agricultural Credit Bank.
Albertson said demand from large enterprise customers was strong.
Once absorbed into LeasePlan, ALD will have the largest fleet in Europe and 3.3 million vehicles worldwide. SocGen will own 52.6 percent of the listed group, with former LeasePlan shareholders holding another 30.75 percent, subject to a 12-month lock-up period.
BNP’s Arval has about 1.5 million vehicles, while the Stellantis and Crédit Agricole joint venture aims to reach 1 million by 2026.
ALD’s net profit in the first quarter before the merger increased by 22.4% year-on-year to 258 million euros.
Some of the auto production issues affecting the industry, including chip shortages, are now easing, Albertson said. He added that delivery logistics issues are still nine to 10 months away, which is expected to improve to a more normal three months this year.