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Fleet leasing: Day's Motor Group Case Study

With 12 premises spread across south & west Wales, Day’s Motor Group is a well-known name for car buyers, especially as it has been serving customers for more than 80 years.

The company was started in 1926 and expanded into the contract hire market with the launch of Day’s Contract Hire.

Day’s Contract Hire funds its own vehicles and last year had a turnover of more than £22 million.

A key part of its growth has been the brand awareness created by decades of service through its dealership, which started with Ford and has expanded to include Peugeot, Nissan and Iveco outlets.

But using a strong dealership brand for a contract hire division does have its hazards, according to Aled Williams, general manager of Day’s Contract Hire.

He says: “We are a completely independent company, with common owners and directors. 

“But there was confusion over brand, because Day’s long history in the area meant people used to pigeonhole us as Ford, although we are independent and offer all brands.”

As the company has expanded into other brands, this has become less of an issue, and the benefits far exceed the branding issues.

There is some referral business from the dealerships, although the car manufacturers have their own-brand contract hire arms, including Ford Business Partner, but there is an
additional bonus because a large number of orders for Ford, Peugeot and other linked brands go through its dealer network.

Because of its long history, the company is also able to secure the large amounts of finance needed to run its own lease book.

Williams says: “The brand can be a huge benefit, because we have to borrow large amounts of money to fund the business and when we use the Day’s name, then everyone is confident about the company, because it has such a long history in the area.” 

Day’s is now one of the top 30 contract hire companies in the UK according to the FN50, the list of the 50 largest firms in the industry based on their funded fleet size, with about 9,000 vehicles.

But the list also includes a number of well-known car retail groups that also offer contract hire direct to customers.

Companies listed in the FN50 include JCT600 Contracts, Arnold Clark Finance, TCH Leasing, Marshall Leasing, Sandicliffe Motor Contracts and Lookers Leasing.

In total, dealer groups represent a fleet of about 66,000 funded vehicles in the table, with manufacturer-owned leasing groups supplying tens of  thousands more vehicles to the market.

Operating an owned fleet isn’t for the faint-hearted, as used vehicle values, which determine whether a contract is profitable for a leasing company, can turn a healthy profit into a frightening loss in just a few months.

Adopting the broker approach is a much safer option for smaller dealerships, but in the long term, both routes offer a viable and valuable business expansion opportunity that is worth investigating as a source of business growth.

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