What are the global objectives at ARI?
We are looking to meet the needs of our clients who are growing globally and to introduce our unique approach to fleet management to markets where we see the opportunity to do so. ARI has had a plan in place for quite some time with regard to the European market based on certain opportunities we had identified. We believed that because of transparency concerns, there were potential customers looking for the kinds of innovative products and services we are able to offer. So, we focused our efforts on finding opportunities that would complement our company’s unique culture and would allow us to build a foundation upon which we could begin to introduce our technology-driven suite of products and services to the marketplace.
Our first targeted acquisition was Fleet Support Group in the UK in 2011. The integration of that company, now known as ARI Fleet UK, has been extremely successful because they had a culture and a customer-centric approach to fleet management that was similar to ours. That was very important to us. As you know, ARI is focused around people, processes and technology, with the number one priority being our people. In the UK, we found the right people to bring the technology and processes to the table, further enhancing the synergies between our companies.
We also recently acquired Fleetlevel+ and HPI Fleet & Mobility in Germany. Like ARI Fleet UK, both of those companies were a fit culturally for us because both placed an emphasis on their people and on their customers. We feel that these acquisitions, in tandem with our presence in the UK, will give us the strategic leverage we need to continue to meet our clients’ global needs.
What is your role?
In terms of our recent acquisitions, I was fortunate enough to be selected by the senior management to help identify companies that fit in terms of our company’s culture and our approach to relationship management. That is very similar to my normal role, so it was not unusual for me to help in building the relationships and creating a platform that allowed our team to take the lead when the time was right with regard to the acquisitions. My other role, obviously, is managing ARI’s global consulting business and working with our Global Fleet Alliance partners, among other things.
What are some of the issues you see rising in global fleets right now?
In Europe, the big opportunity is increased transparency. This is a focus that has been increasing for a while and we think it is going to continue.
I think that financing options will also begin to diversify in the future. We are predicting that companies are going to begin to look beyond closed-end leasing – and, in fact, some of them already have. Some of them have chosen to self-fund their fleets with a captive leasing company. Others are looking to the fleet management companies to help them with both acquisition and resale, among other things – essentially, they’re seeking help with the lifecycle of their fleet, not just the financing. We fully recognize that operational leasing will continue for the foreseeable future, but it’s likely that alternative options will increase.
What is driving this quest for transparency?
Currently, when a fleet or sourcing manager makes a leasing decision in Europe, the quote they are evaluating is only good for approximately 30 to 90 days and it may change after that because of the risk being taken by the leasing provider. This creates a tough situation for European decision makers, however, both in terms of deciding which provider is the best for them and determining if the option that provider is offering is the best option for their fleet. If a company had the ability to see multiple bids at one time, then the options become more transparent and the end decision more sound. One of the reasons we acquired HPI Fleet & Mobility was the ability to offer a multi-bidding product to the marketplace.
I think another factor that is driving the growing interest in transparency is the increasing awareness of how financing is done elsewhere in the world. Many companies are beginning to think about how their fleets are financed, particularly with regard to who takes the risk and how that is done. Companies, especially multi-national companies, know that in North America, depending on the type of lease that you negotiate, there is significantly more transparency because of the way the leases are structured. A company can make one deal for a set period of time – say, three years – and that will secure what the rates and the overall terms will be for that period of time. The company does not need to be concerned that that deal will change. That is not the case in Europe today, and I think there are some companies beginning to consider whether the time is right for a change. We agree and believe there will be a market for more transparent solutions going forward.
I think there is also the potential to create more transparency in the market through the unbundling of leasing and services.
Where are the emerging markets for fleet management?
There are a lot of countries where the percentage of fleet vehicles on the road is significantly smaller than in Europe or the US. Take China as an example. Less than one percent of their vehicles are part of a fleet – and it is the largest car market in the world. We believe that is going to change over time. I think markets like China and other Asian markets are very exciting because the possibilities are endless. In China, you have companies with thousands of sales people who currently have no vehicles – mobility comes through taxis and other forms of transportation. But, taxi rates are going up and the expectations of Chinese employees are going up as well. As that market evolves and the middle class emerges, their expectations will change as well. Employees with a need for transportation will come to expect vehicles just as they are expected in other parts of the world, and the growing middle class will come to expect the kinds of goods and services that are common in other regions of the world as well. And as this happens, the vehicles will follow along and the fleet market will grow.
The European economy has faced enormous challenges over the past few years. How have fleets adapted?
I think the challenging economy has created some rationalization around fleets in Europe, especially with regard to perk vehicles. It is a lot easier to start making decisions around perk vehicles when the economy is tough and people are willing to hold onto their jobs and not be quite as demanding. This has probably happened less in Germany because of the works council and the fact that the country has remained in a relatively strong position despite the challenging economy. But, overall, I think you have seen companies making decisions around perk vehicles as a result of the bad economy.
I think you also see a lot of change around staffing – things have become more centralized. The economy has caused many European companies to examine how they can reduce their overall headcount and many have chosen to centralize many of their functions, including fleet. As a result, the number of local fleet managers and coordinators has decreased.
What do you think is the value of visibility?
There was an interesting survey about two years ago, where a lot of people did not see reporting as that important. That has totally changed. Those same individuals have all moved to “it is important” or “it is very important”. That is a very good change because I believe that successful fleet management must be focused around three things: one is visibility. The other two are transparency and control.
Without visibility – without the ability to take in all of the data a fleet generates and turn that into actionable information – you really can’t do anything meaningful. You can’t make decisions about your budget if you don’t have an accurate understanding of where your costs are. You can’t make decisions about acquisition or maintenance or resale if you don’t have a true picture of your fleet at that moment. You can establish policies and procedures without understanding what you have and how well it is operating. Visibility is critical to solving all of those challenges, and I think you are going to see an increasing demand for it, which in the end is good because visibility is the foundation of any well run fleet.
You participated in NAFA’s International Fleet Academy last fall. What was your experience at the event?
This was an awesome opportunity. In our industry networking is more important than anything else. It is a niche within industries and in that type of situation whatever you can learn from your peers is absolutely vital. It stops you from repeating mistakes they have made. I think associations like NAFA and conferences like this bring that to the table.
From my perspective, putting myself in the fleet managers’ shoes, it is absolutely vital. I think that the size of this conference was ideal for those types of conversations to take place within the group, and I was pleasantly surprised by how many people spoke up, giving their opinions, and challenging ideas.
From a supplier’s perspective, conferences like this are awesome because you get to hear firsthand from fleet managers what their concerns are and you get a sense of where the industry may be going. At the end of the day, no one group, company or individual has all of the answers. Conferences like this give suppliers the opportunity to listen to the individuals who manage fleets day in and day out, which helps us to understand their needs and their challenges. This, in turn, helps us to shape our products and offerings so that we can be responsive to their needs.
So, no matter whether you are a fleet manager or a supplier, this was a valuable experience. I always find value whenever I have the chance to attend these kinds of sessions. I do a lot of them all over the globe and each time I learn something and hopefully I am able to give something back.
Rob Hill is the Director of Global Sales and Consultation for ARI. In that role, he leads the ARI Global Consulting team with practices in Asia, Europe and the Americas. He also maintains and evolves ARI’s global partnerships with leaders in Africa, Asia, Australia, Europe and Latin America, and oversees ARI’s placement of vehicles in emerging markets.
He has a BA in Accounting from the University of Washington and an MBA from Thunderbird School of Global Management. He has been with ARI since October 1996.