Leasing companies are increasingly appealing to more consumers through offering personal contract hire (PCH), however Arval’s UK managing director, Miguel Cabaça, has warned them not to lose sight of their corporate market.
The number of leasing companies entering the personal leasing market has increased rapidly over the past year, with all of the top 10 in the Fleet News FN50 offering some type of PCH arrangement.
The British Vehicle Rental and Leasing Association (BVRLA) reported a 14% increase in personal leasing in the first quarter of 2018, in contrast to a 1% overall decline in business leasing (see Fleet News, July 26).
Arval itself has offered PCH for a few years (via its broker network and direct sales operation to the SME sector) and has recently begun offering nearly new vehicles via PCH (branded Re-Lease).
It now also provides a range of private lease options under the ‘Arval for Employee’ banner which target the employees of its corporate clients who do not have company cars, so that they can fund their new car through PCH or a salary sacrifice scheme.
Serving consumers has brought a number of challenges as leasing companies have had to adapt to Financial Conduct Authority (FCA) regulation and ensure they have sufficient resources in their legal and compliance department, as well as adjust their teams’ skill sets to communicate to customers in the right way.
“Private customers require different skill sets in terms of communication skills, the way you approach them,” Cabaça told delegates at the recent International Auto Finance Network (IAFN) conference.
“Communicating with a driver who is part of a company car scheme versus a private customer that has chosen their car and is paying for their car, you may say 80% of the contact is the same, but there’s 20% which is very different.”
Digital tools are also key, he said: “You have to understand you are facing a very different customer.
“One is a driver that is sitting at a company looking at a laptop in the morning, trying to go through the company car scheme possibilities and choosing their own car.
“Another one is a consumer – alongside our options, they have brokers, they have different dealers, they have different manufacturers, so we’re up against a very different competition. You have to be extremely good in the way you have your digital tools set up.”
Although leasing companies are adapting their businesses to suit consumers, Cabaça believes they must also continue to develop new services to support traditional customers.
“When you see a lot of things changing in the market, there is a risk you actually forget your traditional customers,” he said.
“Everyone is interested in mobility, everyone is interested in PCH, new segments, that’s quite sexy.”