ALD / LeasePlan has released its ‘PowerUP 2026’ strategic plan in a follow-up of its recent LeasePlan acquisition on 22 May 2023.
ALD / LeasePlan operated a total fleet of 3.4 million vehicles as of 30 June 2023, twice the size of its nearest competitor and currently owns the largest multi-brand electric vehicle (EVs) fleet in the world, at 428,000 vehicles.
In a statement, ALD/LeasePlan said the mobility sector benefits from strong and structural growth driven by long-term megatrends:
- The structural transition from ownership to usership is expected to accelerate, lifting the European usership market from 4.9 million vehicles in 2021 to 9.5 million vehicles in 2030, which is +7.7% CAGR compared to 2021.
- Demand for electrification is also set to accelerate, with circa 70% of new passenger cars and light commercial vehicles expected to be electric in Europe by 2030.
- Increasing digitalisation, emerging ecosystems and evolving competition are creating further growth opportunities.
According to PowerUP 2026, the Group’s strategic plan is focused on four priorities: 1) clients; 2) operational efficiency; 3) responsibility and; 4) profitability.
ALD / LeasePlan plans to launch a new brand by the end of the year, to create a powerful new identity from two highly reputed industry players.
“A one-stop shop with the broadest client reach, geographical coverage and the largest distribution capabilities through more than 430 partnerships,” it said in a press release.
ALD / LeasePlan expects that its earning assets will grow strongly by +6% CAGR between 2023 and 2026, driven by higher-value vehicles (underpinned by the rising share of EVs in the funded fleet) and selective growth strategy to meet the Group’s profitability targets. Furthermore, the objective of reaching 200,000 active users of its MaaS (Mobility-as-a-Service) platform, launched in 2022 by 2026, reflects its strong ambition to lead the transition to sustainable mobility and go beyond electrification, into MaaS.
PowerUP 2026 expects that a substantial share of procurement synergies will stem from price and bonus improvement (circa 25% of total procurement synergies from price and bonus improvement on vehicles), while steering and cost control would also be strong sources of procurement synergies.
The company said it will build the most efficient scalable global operating platform and derive cost synergies from efficiency improvements in the operating processes, IT cost savings as well as direct spend savings, including on real estate.
As an illustration, IT cost per vehicle would be reduced by circa 20%, while fleet / FTE ratio would improve by 15% in 2026 compared to 2022.
By 2026, the company will improve its Cost/Income ratio (excluding used car sales results) to circa 52%, from 56% in 2022.
ESG and risk management drive every one of the Group’s actions, the company said.
ALD | LeasePlan targets EVs to attain 50% of new car registrations by 2026, an increase from 28% in 2022. By providing end-to-end solutions, the Group makes it simple for clients to choose electric and targets that 400,000 drivers will connect to its eMSP (eMobility Service Provider) joint venture with ChargePoint, to be launched by the end of 2023.
PowerUP 2026 plans to sharply decrease the CO2 emissions of its running fleet to less than 90g/km on average by 2026 vs. 112g in 2022 and to decrease its internal CO2 emissions by -35% in 2026 vs. 2019. Also, the company will target a high employee engagement rate of 75% in 2026.
Meanwhile, the Group will continue managing its risks responsibly, with a robust governance framework, the leverage of its parent Societe Generale’s best-in-class policies and resources, as well as stronger risk management practices aligned with the Financial Holding Company regulated status and supervision by the European Central Bank.
PowerUP 2026 has a framework in place to manage residual value risk, its largest risk, throughout the asset’s life cycle. Additionally, its global multi-channel remarketing platform (600,000 vehicles sold p.a., access to a large range of buyers in 36 countries, of which 24,000 active traders) together with growing multi-cycle lease capabilities are efficient operational risk mitigants.
The Group is aiming to achieve 13% to 15% Return on Tangible Equity (ROTE) by 2026, a level at the high end of the financial sector. High capital generation will contribute to a robust capital position, with a Core Equity Tier 1 (CET 1) ratio target of circa 12%. Furthermore, ALD / LeasePlan targets a dividend payout ratio of 50% throughout the 2023-2026 period, thus providing attractive returns to shareholders.