sighing, because was a shocking year for the contract hire
industry. I won’t repeat here the horror stories in full ugly
detail: lessors’ funding lines squeezed, residuals plummeting,
demand reducing, clients extending payment periods or simply going
bust. It has, truthfully, been a nightmare.
own business. We help lessors improve their aspects of their
businesses – pricing, strategic planning, sales staff performance,
etc – and these services are still in demand, though like all other
small businesses we do worry about the economy.
We are working currently for companies that want to get
out of the market and others that want to buy in. One person’s
downturn is another’s golden opportunity.
Looking forward, it is clear that 2009 will bring more pain for
contract hire companies. The recession hits them in so many ways
that there’s no way this can be avoided. But what should companies
be doing now if they want to be amongst the winners in 2009 rather
than the losers?
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Staying in the game
Given that around two-thirds of each lessor’s existing portfolio
will still be on the balance sheet in twelve months, and will
comprise the majority of the balance sheet, a major focus must
surely be on the existing fleet. Credit quality is everything these
days, and I am noticing an increasing number of lessors paying much
more attention to their clients’ mid-lease creditworthiness.
Good.
Motoring accounts for a high proportion of clients’ overheads.
Lessors are well-placed to help them reduce costs, whilst improving
their own position. However, this can only be done if the lessor
knows what’s going on in a client’s business and can intervene
positively at the right time. But come to think of it, as just
about all clients are focussing on cost-reduction, perhaps the
right time to intervene with every client is right now. Can we
offer to extend your leases to reduce your costs? Can we help you
redesign your fleet policy so that you can focus on lower-emission
(and therefore generally lower-cost) cars? Can we help you look at
vehicle utilisation to see if you actually need all those
‘business-use’ cars you run?
There’s a good case to be made that the winners from the
recession will be those who regard 2009 as a stepping-stone to 2010
and beyond. For many, 2009 may be the year when it is far better to
focus resources on really helping existing clients rather than
pursuing conquest wins. Several players have already made this
decision and I take my hat off to them. The result will be better
client relationships, fewer losses if clients do get into financial
difficulties and – perhaps most valuable of all – clients who, once
the recession is over, will remember how helpful you were when
times were bad and will take this into account when a low-balling
competitor comes knocking on the door trying to take the
relationship away from you.
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By GlobalDataProfessor Colin Tourick, fleet industry consultant,
http://www.tourick.com/
