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January 1, 2010updated 12 Apr 2017 4:28pm

A merger of equals

Nigel Stead of Lex Autolease talks to Jo Tacon about bringing together two businesses to create the largest fleet operator in the UK

By Jo Tacon

Nigel Stead of Lex Autolease talks to Jo Tacon about bringing together two businesses to create the largest fleet operator in the UK

When Leasing Life catches up with Nigel Stead he is at the airport in Stirling, after a busy day holding workshops and Q&A sessions with staff at Lex Autolease’s office in the Scottish city.

Stead has had a lot on his plate ever since taking on the role of managing director of the newly-minted fleet giant, formed from the fleet companies Lex and Lloyds TSB Autolease, thanks to the merger of their respective parent banks, HBOS and Lloyds TSB, in September 2008.

“We are six months into an 18-month integration process which we hope to complete by the end of 2010,” Stead says. “We have achieved a great deal but there is still an awful lot to do.”

The migration of all the company’s commercial vehicles and cars to one IT platform is, he says, a current priority.

Nigel Stead

Nigel Stead: “Customers care about products”

“It is the key to success, although there are many other tasks to get right as well,” he remarks.

After an evaluation process, which Stead insists was entered into with “no preconceived ideas”, it was decided by the lessor’s management team that Lloyds TSB Autolease’s Connect IT platform would be the “most suitable”.

“We simply wanted to ascertain which would be the best, for the company and for our customers,” he says.

Having decided on a platform, the next task to carry out over the next 12 months is so-called “transition drops”, whereby entire customer segments will be moved over onto the combined system.

The first such segment to be moved over was the broker business, as it was “technically the simplest, thanks to the similarities between the Lex and Autolease legacy broker businesses”, Stead explains.

The broker IT switch was completed on schedule, on 1 November 2008, he adds.

There is a risk, Stead acknowledges, that the creation of such a large fleet – with a fleet over of 300,000 units, Lex Autolease dwarfs its nearest competitor, LeasePlan, with 122,000 – could create a perception that customer service will suffer as a result of the company’s sheer scale.

“There is no doubt that our scale makes us unique, but I would very much like to believe that our scale will bring benefit to customers and colleagues,” he argues. “As long as we leverage it correctly.

“Our size itself is not the issue. I am sure we will be able to maintain and improve customer service levels.

“Customers don’t really care about the scale of their fleet supplier – they care about products, innovation, competitive pricing and so on.”

More than just IT needs to be put onto one platform, Stead points out. The two fleets’ remarketing strategies were, pre-merger, “similar but different”.

Lex put all its defleeted vehicles through auctions, and had a sole-supply auction house partner in the form of BCA.

Lloyds TSB Autolease used dual source auctions, but also operated two wholly-owned retail sites, one a super-site off junction 2 of the M5, run under the brand of Black Horse Car Sales.

The lessor also sold a small proportion of ex-lease vehicles to drivers, to bank staff, and directly to consumers over the internet.

It is the Lloyds TSB Autolease model which has been retained, Stead says, with non-auction disposal routes to be nurtured and developed over the coming year, and beyond.

He emphasises, however, that auctions remain a vital and viable disposal method for the majority of defleeted vehicles.

“Overall, 2008 was difficult [on the residual values front] but the rather unexpected recovery in used car prices this year has helped us and, ultimately, our customers,” Stead adds.

“Whether RVs continue to rise is, however, much more of a fraught question, and in our internal planning we are predicting a small further decline, before an anticipated turnaround in 2011.”

The next year will be a busy one for Lex Autolease, Stead predicts, adding this is “a good thing”, as “we can’t afford not to have enough on our plate.”

He says: “Unless we continue to be proactive in developing products and services to meet our customers’ requirements, we will not succeed to the level that we want to.”

The green agenda and duty of care/health and safety are “very much the focus of the business in 2010,” he adds. Lex Autolease is also working on a new whole-life cost model, which will be unveiled in the new year.

But the depressed economy has at least brought some benefits to fleet outsourcing companies, as it has encouraged many companies in the hard-to-crack SME market to consider the rewards to be gained from handing over fleet procurement, management and disposal activity to a third-party provider.

Bad debt levels among customers in the small business sector have risen only “modestly”, he says, while underwriting has tightened, inevitably, but not to a level where standards are “unrealistically careful”.

Stead says: “It does neither customer nor lessor any good to enter into a mutually unbeneficial situation. We are clearly operating in a changed credit environment, and have to adapt to that.”

In fact, adaptability in all areas is an absolute necessity, Stead believes, along with strong lines of communication to staff and customers.

“We are in a rapidly changing business and must acknowledge that,” he concludes.

“Is it tough? Of course it is tough – but we have to adapt, and the prize will be good for customers and staff alike.”

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