Now the dust has settled after GE Capital’s
restructuring process, John Jenkins and Gary Killeen tell
Jo Tacon what has
changed
It has been an eventful year at GE
Capital, and its fleet unit has been by no means an exception. The
UK corporate finance business has been thoroughly restructured as
part of a global reorganisation of GE Capital.
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John Jenkins, the CEO of GE Capital UK since
May, is clear that the restructuring has left the business, and all
its divisions – from fleet, to equipment leasing, to invoice
finance – in a much stronger position to handle the challenges of
the future.
“Through 2008, we knew things were changing,
then Lehman Brothers was allowed to go to the wall [in September
2008] – the news of that hit us like a bombshell,” he says. “It
prompted a wholesale reappraisal of every business line at GE
Capital: why are we involved in this area? Does it make sense to
us?”
The UK fleet division at GE Capital has been
relatively unaffected by the reorganisation, says Gary Killeen,
business leader at the unit – although GE Fleet is now focusing
exclusively on its larger customers (larger fleets are customers
with greater than 50 vehicles) while not choosing to expand upon
the smaller fleet contracts in its portfolio.
“Our larger customer strategy is now embedded,
and the fleet business within GE Capital was in fact slightly ahead
of the curve in terms of asking ourselves what customers we are
best-placed to serve,” Killeen says.
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By GlobalDataThe reorganisation of GE Capital has been
carried out with the express intention of breaking down the silo
walls between its four core business finance areas: fleet contract
hire, factoring, equipment finance, and business lending.
This logic led to the disposal of GE Money at
the beginning of the year.
“It didn’t add value,” Jenkins explains. “We
didn’t want to impose a new structure on our core businesses, but
rather we looked to simplify the structure, making it more
efficient and effective.”
Cross-selling is now easier, Jenkins says.
He adds: “We are already seeing a bit of an
advantage, as people talk around the coffee machine.”
Customers are now more aware of the breadth of
GE Capital’s business finance offering, Jenkins says, while the
decision to concentrate on large customers has only had a “limited”
impact on client numbers, to date.
“We have won some large [fleet] accounts,
too,” Killeen says, although he isn’t able to name names at this
time.
GE is a company with a strong pedigree of
technological innovation, and GE Capital is keen to build on this
legacy, says Jenkins.
“We have strong fleet products, and we
launched our iQuote system five months ago, which has much more of
a ‘retail’ feel, while allowing drivers to make fully formed
decisions,” he says.
The fleet division is also leveraging the
opportunities afforded by the integration of the wider GE Capital
business through a “cross-fertilisation” of technology, Jenkins
adds.
“For example, we have just launched
e-signatures for fleet customers, which we originally utilised in
the equipment finance business,” Killeen notes.
“It means that employee car ownership schemes,
which typically present quite an admin challenge, can benefit from
a fully compliant, fully digitised e-signature, cutting the admin
burden.
“In high-volume small-ticket leasing,
e-signatures are a vital tool, so we moved them over to vehicle
leasing, too.”
The recent rise in trade values for defleeted
vehicles has come as a relief to GE Fleet, customers and the market
in general; meanwhile, a “more sophisticated” approach to residual
value-setting and channel development will aim to ensure that
optimum residual values and subsequent remarketing performance are
achieved, says Killeen.
“We are embracing some web-based sales
technology, working on the ‘if you like this, you might also like…’
principle,” he adds.
Use of such channels for disposals has doubled
in two years, and is set to grow further. In addition, GE Capital
is piloting an own-vehicle sales system, based on epyx’s
remarketing IT platform, to offer cars to GE staff, and there is
“no reason” why such a service could not be offered to fleet
managers among their client base, too, he notes.
Jenkins believes that, in the current adverse
economic climate, companies are looking to “unlock asset value” –
which has led to a rise in sale and leaseback deals.
“Cash-rich customers want to make tax savings,
and we have a unique product which can unlock the VAT benefit while
delivering cash savings,” he says.
On a wider scale, the recession has
accelerated the move towards outsourcing of fleet functions, he
observes – even more so than previous downturns.
“Costs are now front and centre for fleet
managers,” Jenkins says. “Outsourced provision is something that we
have invested in, as a result – we are looking to provide a wider
range of services to help fleet managers meet internal
challenges.”
As the fleet manager’s role becomes more
strategic than operational, with the leasing company partner there
to do the “heavy lifting”, Jenkins emphasises that the contract
hire provider must provide the data and information the fleet
manager needs – in a more sophisticated form than ever before.
Killeen predicts that hard times will bring
OEMs and fleet operators closer together.
“It’s a very natural relationship, as we have
many shared objectives,” he says.
And perhaps customers and lessors will start
to take more of a partnership approach – as has been seen with some
equipment finance customers, Jenkins adds.
“Many large corporations want to share in the
risks and rewards in areas such as RVs,” Killeen adds. “As the vast
majority of them self-insure already, why should they fully
outsource RV risk?”
It’s an intriguing point – and indicative of
the wider changes afoot at GE Capital, and within its fleet
unit.
