Office equipment leasing is a €16bn business in Europe
and BNP Paribas Leasing Solutions is the dominate force in the
market. Grant Collinson talks to
the French lessor this vital sector
With one new office equipment leasing
transaction started every working minute, resulting in 100,000 new
contracts each year, BNP Paribas Leasing Solutions holds the
envious position of dominating the European market in office
equipment.
Go deeper with GlobalData
Leasing Life spoke to Richard
Gendreau, head of partnerships at BNP Paribas Technology Solutions
and Audrey Joulia, market manager for office equipment, to get the
low down on how the market leader views the sector and the year
ahead.
Grant Collinson: What do you think are
the most significant issues which affect leasing in the office
equipment sector?
Richard Gendreau:
“There are two things which are quite different. On the one hand
the market is quite stable and mature and not expected to change
dramatically when you have in mind the financing penetration can go
up to 90% in some countries.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“However, there is a major office equipment
manufacturer which is moving to in-house financing captive model
and this will reduce the size of the market for the leasing
companies.
GC: How long has that been in the pipeline?
Audrey
Joulia: “We first saw this two years ago.”
RG: “Yes, and it is
now being implemented. There is a time lapse from country to
country and we are now in the middle of the process.”
GC: You mentioned 90%
penetration in some countries. Which countries?
RG: “The biggest
European countries; France, the UK…”
AJ: “The weakest
country is about 70% finance penetration so even for the weakest
country, the less mature markets, finance penetration is very high.
The more mature countries are Belgium, France, Netherlands, and the
UK.
GC: The manufacturer bringing
finance in-house, is that globally or in certain
markets?
RG: “Globally, I
would say, but there may still be some countries where they will
not employ that model but that will be negligible really.
“There is also a second impact on the market.
We expect to see some changes in the competitive landscape because
some leasing companies are having more and more difficulty in terms
of access to funding and that’s because of Basel III. Leasing
companies will need to get ready.
“We see an opportunity because we are part of
BNP Paribas and are fully funded by the group which has one of the
best ratings in the world. We’ve been resilient during the crisis
and have ambition for growth in technology vendor finance. Office
equipment specifically is a core focus for us, having our
international business line and our European business dedicated to
vendor finance in technology. Having a focus on office equipment,
we will benefit from that.”
GC: You see part of that
opportunity because competitors will suffer?
RG: “Yes. And because they lack a
focus on office equipment.”
GC: Within the office
equipment sector are there assets which are experiencing separate
issues or are particularly affected by what you’ve
said?
RG: “No, not really.
The difficult situation faced by some leasing companies in the
market will impact their activity across the market; it will affect
them in IT, telecoms or software.”
GC What about customer segments? Are any businesses
particularly affected by conditions at the moment?
AJ: “Our approach is
to be vendor finance focussed in the office equipment market so our
segmentation is manufacturers on one side, what we call direct
business, and wholesalers on the other side, indirect business.
“Regarding your question about customer
segments, we see three main segments, large corporates, SMEs and
public administration. The large corporates are continuing their
investment but we are facing delays in the big investment
decisions.
“The SME segment is facing more and more
bankruptcies and in the third one, public administration, there is
pressure on public spending.”
GC: Have you seen a squeeze on
public funding across Europe affect business?
RG: “More or less,
depending on the country. The majority of our business is vendor
finance and is not in public administration; it is a significant
area of business but not huge.
GC: How has the office
equipment sector performed so far this year, both year-on-year and
since the end of 2011?
AJ: “We can’t give
precise figures. However, the market is quite stable as are
volumes.
“Leasing Solutions is the European leader in
office equipment market; we have a market share of roughly 20%.
It is just two months [in 2012] but we are
quite happy with how we have performed – we are following the trend
of the market.
“The market is stable even if we are having a
slight decrease because it is a mature market. It will remain
stable and we envisage the competitor landscape changing (as
mentioned by Richard).
GC:
Are any asset classes performing particularly strongly, so far this
year or towards the end of 2011?
AJ: “Not specifically
based on assets, but we seen in the emerging countries, such as in
Eastern Europe, there is a move towards higher standard of
products, whereas, in Western Europe, the office equipment market
is already mature so is based on equipment renewal.
“In this context, we see the vendors and
manufacturers are investing in promoting what they call MPS
[managed print services] solutions where the service and the
software is becoming more and more in important in the deal.
GC: To what extent is the
office equipment sector driven by technology?
AJ: “Again, in
emerging countries it is more and more important, similarly to
western countries, and we are now roughly aligned in terms of
pricing and product.
“In Western Europe, the arena keeps
changing in terms of portfolio statistics but we are embedding more
and more services elsewhere in our leasing contracts.
“So, we assess that having a proactive
management of the portfolio is mandatory to maintain activity. At
Leasing Solutions, we are proactive in that respect.”
GC: Latest Leaseurope
statistics available (2010) have office equipment accounting for 8%
of leasing in Europe (around €15.6bn). How does this reflect your
understanding of the market and the BNP Paribas Leasing Solutions
book?
AJ: “We use a number
of definitions regarding the financeable market but we usually say
we will arrive at a figure between €7bn and €8bn in financeable
business.
“As office equipment is one of our core
markets, it actually counts for more than 10% of the Leasing
Solutions total portfolio, so above the 8% figure. Office equipment
and ICT are the two pillars of our business line in Technology
Solutions.
GC: You’ve already mentioned BNP Paribas’ market share of
office equipment leasing in the Europe is 20%. How is that split
across the countries in which you operate?
AJ: “Our most mature
countries where we have a leading market position are France, one
of our domestic markets, the UK, Belgium and Portugal. We have a
significant position in Italy and the Netherlands and we have
really strong ambitions for growth in Germany and Spain.
GC: Is there a particular
reason why you haven’t been as strong in Germany and
Spain?
RG: “It’s a
historical reason. If you take Spain specifically, we just launch
there two years ago and Leasing Solutions in Technology and Vendor
Finance is already number three so we are making progress but there
is long to go until we reach expected levels.”
AJ: “And in Germany,
as it is the biggest country for financing, it takes more to time
to increase our market position.”
GC: What do you see as
the biggest impediment to growth?
RG: “The first thing
I mentioned in this interview. The office equipment market leader
is moving to an in-house captive model. This will reduce the cake.
In the current context it is not easy.
“We are already facing increased competition
but we do not expect the economic context and this move to an
in-house captive model to impact our business and growth plans.
“Our foot print on the market, our geographies
with room for growth and the balance between direct sales and
resell business is also important.
“It is true the available market will reduce,
there will be changes in the competitive landscape but on our side
we still have ambitious growth plans.
AJ: “Yes, we have
strong expectations…”
RG: “We have strong
expectations across Europe at large, yes, but, to be transparent,
in France we are not going to make huge improvements considering
our footprint in the French market.
AJ: “Our market share
[in France] is far above 20%.”
RG: “If you take the
reseller business on one hand and geographies where we are not that
strong, there is room for growth for us.”
Correction: The
original version of this article, published 10/04/12, contained the
phrase, “However, there is a major office equipment
manufacturer [Dell] which is moving to in-house financing captive
model”. Richard Gendreau and Audrey
Joulia did not refer directly to Dell or to any manufacturer
during the interview. This was not made clear and has now been
amended. 08/05/12.
