Each month, Motor Finance analyses results posted by
lessors over the previous four weeks to discover the latest trends
in the industry. Jason T Hesse
looks at those published in January 2010.


Turnover steady, profits fall at

Despite bank-owned ALD Automotive Limited
reporting stable turnover in the year ending 31 December 2008, the
French fleet lessor saw its profit levels deteriorate

Indeed, Société Générale-owned ALD saw pre-tax
profit fall from £7.1 million to £1.4 million, although turnover
was flat, at just under £150 million in both years.

Importantly, however, the decrease in profit
included a one-off £2.6 million charge relating to property owned
by its loss-making Car Supermarket operation, which ALD
discontinued last year in reaction to the downturn.

ALD also reported a 5.3 percent growth in total
fleet size, to 49,054 units, which the company’s directors said was
“in line with expectations”, while productivity – a measure of the
fleet size in units per number of full time staff – grew from 166.3
to 190.1, a 14.3 percent increase due to the increase in fleet size
and reduction in headcount.

The sharp fall in residual values in the second
half of 2008 had an important impact on the company’s return on
equity, which fell from 42.1 percent to 4.9 percent.

But ALD has plans to grow this year, achieved
through better use of e-business solutions, and a focus on customer
care throughout the entire fleet management life-cycle, the
directors explained.

“With a proven and integrated IT infrastructure and
a skilled team of people based in Bristol, Northampton and Milton
Keynes, we are well placed to manage increasing volumes of fleet
management activity to the high standards expected,” they said.

“We are also extremely well positioned in the
market to win market share from our competitors through our
innovative product offering and high levels of customer

As to 2010, ALD said it anticipates that the market
will “continue to be competitive”, with the volatility in the used
car market being likely to provide “the largest variations” in
future results.


Steady growth at

One company that has continued to shine
throughout the recession is Motability Operations Group plc.

Motability Operations was set up to work with the
national charity Motability, which assists disabled people with
their motability needs.

Through the scheme, disabled people can choose to
divert the mobility allowance they receive from the Department for
Work and Pensions towards the cost of leasing or hire-purchasing a
new car.

As of 30 September 2009, Motability’s fleet stood
at 520,000 vehicles. In the previous 12 months, 61,000 new
customers joined the scheme, representing a growth of 4.5 percent

Turnover at Motability Operations also grew by 7.4
percent year-on-year to £2.2 billion, while pre-tax profit was
£283.3 million. However, as a not-for-profit plc, the lessor
reinvests any surpluses back into the business, for the benefit of
its customers.

As well as leasing vehicles to its customers,
Motability is also responsible for reselling the used vehicles into
the used car marketplace.

Last year, the lessor resold 162,000 vehicles, and
acquired 190,000 new cars.

Motability’s remarketing strategy is centred around
an online tool, ‘mfldirect’, through which certified trade
subscribers can buy vehicles online 24 hours a day.

“Our ‘end of contract’ processes enable us to
pre-sell a car online before it is returned at the end of lease,”
David Gilman, finance director at the lessor, explained.

“While we target this marketing across all our
registered buyers, it provides a particular opportunity for the
dealers who originally supplied and then maintained the vehicle –
it means that they can buy a low mileage, fully serviced vehicle
that they know first-hand, and which, through our end of contract
process, will most likely be returned to their forecourt at the end
of lease.”

Gilman added that although there has been
“considerable volatility” in used car values, Motability has been
able to protect the scheme through “prudent” residual value
provisioning, and a flexible pricing model.

Turning to 2010, Gilman remains positive about
achieving growth this year. Indeed, Motability aims to branch out
into offering powered wheelchairs and scooters to its customers,
starting from July.

This scheme will be similar to Motability’s car
scheme, where customers who choose to take a scooter or powered
wheelchair via the scheme can assign their mobility allowance
directly to Motability.

“The business is well equipped to accommodate
further growth,” he said. “In addition to our fully scalable
business model, our robust financial and operational platform has
enabled us to respond positively to recent expansion.

“With diversified funding lines in place and
headroom secured, the business has the necessary liquidity to
support growth.”