Use margin, not volume,
says Robert Peterson, ABN Amro Lease director of strategy and
innovation.
Go deeper with GlobalData
Investment levels may
return in 2011. Perhaps not to the levels reached before the
crisis, but the first signs are hopeful.
During the crisis our
industry has been forced to move from selling high volumes at low
prices toward selling products at more reasonable
prices.
And that has had positive
results for many of us.
But what about the
volumes?
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By GlobalDataThe numbers went down with,
in some cases, 10 or 20% – or more. Subsequently, the size of our
portfolios has decreased.
That was no big deal so long
as margins were going up.
Today we have arrived at the
beginning of what I hope will be a long period of increased
investment levels among our clients, and strong demand for external
funding.
The outlook is positive.
Margins are acceptable and a pool with new volumes is expanding in
front of us.
Generally, it has been
acknowledged that current margins are necessary to conduct a sound
and sustainable business, and a business that enable us to invest
in research, product development and better services.
So a level that is good for
our clients, too.
We should not fall for the
temptation of buying business cheaply, to enable our portfolios
grow fast again.
This has been acknowledged by
industry leaders in Hamburg at the Leaseurope 2010 annual meeting,
and in articles in Leasing Life.
Maybe it has been a one-off,
but we have experienced the first competition on price
already.
Each year, Leaseurope
publishes a ranking of leasing companies in Europe. This ranking is
based on new business volumes and size of portfolio.
Wouldn’t it be a good idea to
propose to Leaseurope that it compose this year’s ranking based
instead on profitability or revenues?
This should perfectly reflect what our industry’s aim is:
to compete on products and services resulting in more volume and
better returns; and not to compete on volume or price alone,
resulting in losers – both lessees and lessor – at the end of the
day.
