Green shoots

Peter Hollinshead has pursued
increasingly specialised positions in the leasing industry during
the 30 years in which he has been involved in it.

Since 2005, this has meant heading up HSBC
Vehicle Finance (HSBCVF), the global bank’s car and CV financing
arm in the UK, which he has turned into an intensely forward-facing
fleet business through a groundbreaking joint venture with Lex.

Back in 1980 though, when Hollinshead worked
for leasing subsidiary Forward Trust, part of the then Midland
Bank, as a new business rep, his work spanned a much wider range of
activities.

“The role was broader then,” says Hollinshead.
“And part of that breadth was the fact that, if you were involved
in lending, then you had to be involved in collections too. It gave
me a real understanding of risk; that if you lend you have to be
comfortable that you will recover, and that has stuck with me ever
since.”

Hollinshead was appointed head of Forward’s
new commercial vehicles division in 1995, which was focused on
providing hire purchase, finance lease and operating lease products
to the haulage sector.

Then, in 2001, he became head of purchasing
and vehicle management at
HSBCVF, formerly Swan National, where he managed the company’s
third-party relationships with dealerships and maintenance
providers.

This role prepared Hollinshead for the
development he would oversee in his eventual role as head of the
company – the outsourcing of all back-office processes to fleet
titan Lex.

In practice, this means the management of a
40,000 strong vehicle fleet through roughly 200 staff in Lex’s
Amersham and Stockport offices, with 12,000 new service-inclusive
contract hire deals written annually.

Considering Lex already runs a portfolio of
some quarter of a million vehicles, this grafting on of HSBCVF
operations made economic sense to Hollinshead.

Competitive market

“It has become harder and harder to grow fleet
rapidly in what has become a very mature and competitive market,”
he explains.

“One advantage of this partnership is the use
of Lex’s existing IT system, which has easily expanded to take the
extra capacity of our business.

“Another is customer service – due to
economies of scale, expanding our fleet and staff size through Lex
has given us a lot more flexibility in terms of the way we handle
calls.”

Hollinshead’s decision to outsource vehicle
management to Lex has, in his opinion, freed up his business to
concentrate on what it does best – developing contract hire
products, marketing them, and selling them to fleet customers.

He comments that all activity undertaken by
his 50-strong sales and marketing staff is HSBC-branded “through
and through”, and that HSBCVF’s contract hire product is very
different to Lex’s own offerings.

But how will the HSBCVF product line change in
2009? Light commercial vehicles (LCVs) have historically made up
around 20 percent of HSBCVF’s fleet, but now that proportion is on
the rise.

“Historically, companies have always been
happy to lease cars, seeing them as an asset that depreciates and
therefore best left on someone else’s book,” says Hollinshead.

“They have tended to own LCVs, however, seeing
them as a tool for generating income. But more and more customers
are now seeing the benefits of LCV contract hire as we have shown
our expertise in vehicle specification.”

Hollinshead has also seen a “definite uptick”
in enquiries and business written for sale and leaseback deals.

The rationale is simple, he explains: “Why
should capital be locked up in vehicles when it could be being used
to run the business?”

Despite these gains, though, Hollinshead knows
that 2009 will be a difficult year for HSBCVF’s contract hire book.
His main hope is that fleet customer uncertainty will ease
throughout the year, allowing for a stable start to 2010.

“There will be a lot of pent-up demand waiting
when we get through this” he says.

“Then, as customers start to see a few green
shoots, companies that have extended terms or put off decisions
will begin to replace vehicles.”