UKRAINE: ALD Automotive moving corporate car leasing market towards outsourcing and modernity
What were your first impressions about the automotive leasing industry in Ukraine and what have you done since?
When I came to Ukraine almost two years ago, I found a very archaic situation in corporate car fleet management. Most of international companies operating in Ukraine were still buying cars directly and managing their own car fleets: as an evidence for that, we can look to the very tiny size of the car leasing market: only around 25000 vehicles, which also includes volumes from individuals and Ukrainian SMEs!
Whether on an emerging market or a developed market, the tendency of any business is to maximally outsource cost centers that are not related to the core business of a Company. In that sense, the car fleet cost center is one of the most significant and difficult to manage for any international corporation, both in terms of cost control and operational efficiency. Any Company having a significant car fleet will be facing significant difficulties if managing it internally: for example the huge number of suppliers (service stations, tyres service providers, assistance companies etc), resulting in an enormous amount of invoices to be checked and controlled, as well as in a difficult follow-up of the necessity, reliability and rapidity of any repairs, or the challenging process of insurance claim management to be handled on a daily basis.
On the other side, the fact that most of these international companies remained until now in car fleet outright purchase was related to the poor leasing offer existing on the market, and resulting in a negative customer and driver experience:
Local leasing companies do not provide the international standards in terms of processes, customer care and product that exist anywhere else all around the World: real outsourcing of exploitation risks was not actively proposed and explained to international corporations, and instead led room for abuse by dishonest parties. For example, the usual local approach was not to include in a lease payment all the unplanned repairs of a car (i.e. the repairs not covered by the manufacturer warranty and not included in the regular maintenance list of the vehicle). This resulted in keeping Companies handling risks on their own, receiving additional invoices any time a repair was required. We also see many cases when a local leasing company included only the insurance premium, leaving clients alone to handle the claims and repairs processes! Read the full story