The new company created under the umbrella of ALD Automotive and LeasePlan will have a name that will differ completely from ‘NewALD’ and will have a neutral meaning, according to the first executive of ALD Automotive in Spain, Pedro Malla, in an interview granted to Fleet People.
QUESTION- First of all, thank you for giving us your time, because lately you must have even less than you used to have…
ANSWER- No, I’m not well [laughs]. I am relaxed. With a lot of work, but not much more than other times. We have always had a lot of work.
QUESTION- The merger of LeasePlan and ALD, the consolidation of the purchase process, seems to be taking longer than expected, it seems that Brussels has not yet given the go-ahead to the operation. Why?
ANSWER- Well, it’s not that something specific is happening, but rather that in the end these are normal market circumstances and everything takes time. One thing is what you expect and when you expect it, and another thing when things arrive. Many times you have to give some additional clarification, an explanation or fill in something else simply because it is not signed. We have to bear in mind that these types of processes are very complex, they are not easy, because we are talking about a macro-operation where the European Commission has to guarantee in some way that the operation is viable and that it does not generate a distortion in the market. That is the most important thing. From there, we already anticipated and we knew, as we know perfectly well the positions of each of the countries, that there were a series of countries where the Commission logically indicated that action had to be taken. And this is being resolved in a very direct but simple way. We have sold six country companies to Crédit Agricole and Stellantis, which does not mean that we are not present in those countries. We are, but we are not merging the two companies.
QUESTION- How is the merger process taking shape in Spain? It is foreseeable that the LeasePlan staff will be incorporated into the ALD headquarters in Madrid.
ANSWER- This transition is going to take place in a quiet, calm manner. To put it in perspective, what we have now is an intermediate situation in which both companies belong to the same shareholder, which is Société Generale. There is a process of merger and integration into one company, which is not a quick process, of course, but it is not slow either. It has to take its course because the two companies are present in 20 countries with other subsidiaries in between, such as insurance companies and banks. There are many aspects to sort out and they are already being planned. Full consolidation will take perhaps a year to a year and a half. There are countries where the process will be a little faster, and in other countries where it will be slower, either because of their own legislation or because the structure we have is a little more complex. But I think that in a year and a half, I would say by the middle or end of next year, we will be under the same umbrella, under the same shareholder. And in Spain the same thing will happen to us. Right now we have two main companies and we estimate that in a year or a year and a bit we will be, if not merged, then on the verge of merging into one entity. That will mean that we will be operating in Spain with a single NIF. In the meantime, we are going step by step, discovering, developing aspects, looking for synergies, common processes, common regulations. This is an issue that does not happen overnight. I estimate, more or less, that by the end of this year we will be acting as a single entity for almost everything. That means that we will have the same offices in the same building, whether in Madrid or Barcelona or in other locations. We will all be under the same roof and this is a very important issue, as in the case of the pandemic we could say that every cloud has a silver lining, because in a way it has helped us all to work in a different way from how we used to do it. Talking through a screen is now something we see as very natural. A few years ago we didn’t see it that way.
I estimate, more or less, that by the end of this year we will be acting as a single entity for almost everything. That means that we will have the same offices in the same building, whether in Madrid or Barcelona
QUESTION- There may be less personal interaction, but it is more effective and direct.
ANSWER- Right now almost all the companies are working like this, some more, some less, some days, some days… And it allows us to interact much more with other colleagues who are not close by. Before, you had your desk with the photograph of the children and now you sit not where you want, but you can sit at the desk on the right or on the left when you arrive at the office. This has changed. And we are used to seeing ourselves on screen, to having a ‘call’ with 40 people in which each person is in a different part of the world and nothing happens.
QUESTION- Will the name given as a result of ALD and LeasePlan, ‘NewALD’, be the definitive name?
ANSWER- It is not going to be called that. It was actually an internal formula to name the operation, but it will not be called that, among other reasons because, if it were, we would leave the name we already have. It will have a completely different name, which will also be somewhat neutral. It is about doing something new, with a new business. I can confess that at the moment I have no idea what the name will be, but I hope it will be a nice name. There will be those who like it and those who don’t, like everything in life. We hope that by the end of this year we will have a new logo and branding with a new name and new colours.
QUESTION- Will becoming the leading leasing company in Spain in terms of fleet volume put you in a position where you see only facilities or can it also have some complications, for example in terms of bidding for a tender?
ANSWER- In the end, customers trust you based on several criteria. The first is the service you provide. Because what the customer does is to hire a service. And if you do it badly, it’s a problem. The second issue is the robustness of the group. We are a tremendously solid, robust group that is telling the market that we are betting on this sector, betting in an incredible way. Hence the various acquisitions we have made over the years. And this is the most important one, the robustness of the service you provide. Logically, service goes hand in hand with innovation. Being able to do things in a different way that satisfies the needs of customers and what they aspire to. But also price, logically, is one of the drivers, one of the elements that are also important. I have to say that in a very competitive world like the one we live in, size helps you, it helps you on price. But of course, if you don’t provide a good service, if you remain stuck in products that are not innovative…. And if the price is bad, then you have no options. We have enormous respect for the rest of the players in the sector, because they are also very solid, they give a very good service and they give a good price. In other words, the market is very competitive and with very good professionals, so we will continue to compete in exactly the same way as before. And economies of scale are also important. It is not the same to invest hundreds of millions of euros in developments, with all the risk that this entails when you have 3.3 million vehicles, as it is when you had 1.7 million before, the difference is that you distribute among more and that makes you more competitive. And then, the bigger you get, the more you learn because you have a greater diversity of customers. They ask you for more things. You can learn a lot from the customers themselves because they teach you a lot, they are the ones who put you on the spot.
QUESTION- Will the fleet in Spain consist of about 300,000 units?
ANSWER- A little less. The absolute sum of the two companies is 270,000 vehicles.
QUESTION- It won’t be long before reaching 300,000…
ANSWER- I wish we had 300,000. But the figure is still very good. Of course, we will be able to reach 300,000 because we want to. We have all the desire in the world. We have to bear in mind that we will be the number one in the leasing market and in mobility solutions in general. And everything we are doing is becoming more and more popular. In other words, we are touching customer segments that were not part of it before, and that allows us to broaden our business vision. Before, we were corporate, with a lot of companies and large companies. A tremendously interesting segment, but the most mature. There we can fight with our competitors and sometimes we will win, sometimes they will win. But with the incorporation of SMEs, the self-employed and the private sector, the horizon has opened up and we have seen a sea of possibilities… We are fishing in that sea.
QUESTION- I’m switching to the sector… How is the year going for leasing? It seems that the first quarter has been a little weak?
ANSWER- We are doing well, although it depends on your expectations. If the classic is to grow by 10% and then you grow by 8%, you may think it’s a bad result. And if you were aiming for 4% growth and then you grow by 5%, it’s wonderful, isn’t it? It is true that we are in a somewhat complicated market. It is still complicated because the supply of cars is not coming in as we would like. We thought we were going to have a wonderful market with as many cars as we had in 2018, 2017 or 2019 and yet there are still some problems, much less than we had in the last year and before, of course. But it is a market where the supply of cars is not uniform with respect to supply. What we are noticing is that some customer segments are having a hard time with the great development that we thought was going to take place in private leasing, because the sale of vehicles to private individuals, in the case of leasing, is still influenced by that first part. And we are not a rara avis, that is to say, if sales to private customers increase, we increase private leasing, and if they decrease, we decrease. Sales to the private customer are struggling for several reasons, because there are more cars or less cars, the prices of cars have risen dramatically, and then there is the issue of disposable income. Mortgages have gone up, inflation has gone up, we have a very important tax increase… and this is going to affect all of us. And there are certain uncertainties in the Spanish economy that can somehow hold back some demand. Consumer confidence, the Elections… There are a series of elements that are causing demand to fall, because if a car that used to cost 300 euros or a little more, to give you an example, and now the same car costs 400 or 500 euros, then that increase is there and interest rates have risen and each citizen has a disposable income of equis, which has now been reduced because you are paying more on your mortgage, for example. Perhaps that is why the expectations we had and the reality of the first few months have been a little more discontinuous than we expected last year. It is also true that on the corporate side, the companies, everything is working very well. That part is doing very, very, very well, while the individual part is doing a bit worse. Flexible Renting is also working very well, because it is convenient. People, companies, commit to less, they pay a little bit more, but they commit to a shorter term. So they can perfectly accommodate the car as a work tool. They have it for a few months, which may be four or 12 or 18 months, for example, but they limit their needs very well and that is working.
QUESTION- You must also be particularly affected by the rise in rates, right? Handling such a large volume of vehicle fleet, and taking into account that rates were very low a few years ago, how are you coping with this increase in price?
ANSWER- You have to pass it on to the customer. It is impossible to think that such a cost does not have to be passed on to the customer. We have inflation in our own internal costs, in overheads and payroll, in the product you buy, which is the car, so you are going to have to pass it on. I would also point out that as a company you have to have expectations covered, you have to have made forecasts. Because if tomorrow I think that the price of oil is going to be x-ratio and then it is twice x-ratio, maybe we haven’t done things right. If I am hedging my financing and I have an equis rate hedge and I miscalculate it, we have a problem. But I think there are very good professionals in the sector and we all know how to estimate prices. We can get a bit confused, and it is inevitable to point out that the inflation we have had and the rise in interest rates are two very, very, very tough elements. But in a way, the rise in interest rates is achieving what it is aiming for, because private demand is decreasing. So inflation, instead of being galloping, is a little bit softer. They have announced that they are going to continue raising interest rates, despite the fact that in Spain we may think that inflation is a little lower than in other countries, but in the end it is a global issue. But all these factors have an impact and the previous paradigms were a bit absurd. Pretending to work in an economy with interest rates that are not zero, but negative, is not normal.
