Fred Crawley speaks to Jon
Lawes, MD of HCVS’s commercial vehicles division, about business
strategy.
Go deeper with GlobalData
Hitachi Capital Vehicle Solutions’ (HCVS) managing
director Jon Lawes has said the business is focused on “building
sustainable growth” after record growth in the last year.
Although HCVS had to make staff
redundant during the crisis of 2008, it has begun to re-hire, and
last year’s commercial vehicle team of 60 has increased to 88. The
team will be bolstered further when six graduates join as part of a
sales recruitment scheme.
Lawes has parent company Hitachi’s
backing to relocate to new premises within the next year – a move
he says is not being made to facilitate massive expansion plans,
but to manage the unprecedented growth seen by the business over
the last financial year.
When the last financial year ended
in March, HCVS had increased profit beyond the previous year’s
figure of £10m (€11.5m) and had grown its fleet size from 45,000 to
55,000 vehicles under management.
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By GlobalData
Jump in fleet
size
Of this figure, Lawes’ commercial
vehicle division comprises some 23,000 vehicles, up from 15,000 at
the end of the full year 2009. This jump in fleet size represented
record growth for the Trowbridge operation, which wrote business
that far exceeded expectations for the year.
What’s more, this figure excludes
the acquisition of fleet firm Newtown Vehicle Rentals (NVR), which
went into administration on 2 December and was subsequently bought
up by Hitachi.
The sale of the business and its
7,000-vehicle CV portfolio came following a failed attempt by the
company’s management and lenders to restructure the business, but
left Hitachi with what administrators called “a profitable and
growing business with robust revenues and a high quality customer
base”.
Nevertheless, Lawes says the
business did not pick up NVR purely to increase scale. While the
new portfolio included 2,000 rental vehicles in addition to its
contract hire fleet, four months of trading under Hitachi saw this
whittled down to just 300.
The broad outlines of HCVS’s
strategy have been set by it’s parent company Hitachi. “Hitachi, as
a Japanese company, has a very long-term philosophy and so knows
what it does and does not want to invest in.
“The mandate from Tokyo was very
clear on the NVR acquisition – to buy the business for its contract
hire fleet, and then get out of the rental sector since that was
not a product line the group wanted to develop.”
The same type of thinking will
apply to any further potential acquisitions by HCVS in 2011. While
there are certainly acquisition funds available, whether they will
be used depends on whether potential targets match up with
Hitachi’s long-term investment interests.
Lawes says: “We would be very
unlikely to acquire a business with a portfolio of brokered
business, since this doesn’t line up with our own new business
channels.”
In any case, this close strategic
link with Japan has recently been furthered this year by HCVS’s
rebranding under the aegis of Hitachi Ltd.
Although HCVS will retain its name
when dealing with customers, its adoption of the wider Hitachi
identity has been what Lawes calls a “vote of confidence” in its
place within the group’s priorities, and will give it a greater
edge when engaging with new clients.
Great financial
stability
He says: “Our adoption of an international brand backs us
up with an image of great financial stability, and gives
prospective customers a good level of confidence and comfort in the
business they are dealing with.”
Another facet of this closer
interaction with the wider Hitachi group, he explained, has been
the decision that HCVS should be providing and managing fleets for
other Hitachi group businesses, not just in the UK but in
continental Europe too.
Currently, HCVS manages only one
fleet of commercial vehicles in Europe, for the French division of
meals-on-wheels company Apetito, but a series of contracts with
Hitachi companies in the eurozone could see the division pick up
much greater continental expertise.
“We see this as a big potential
springboard into European business, and what better way is there to
move into new regions than by working with colleagues first,” says
Lawes.
Nevertheless, the company’s focus
remains on the UK at present, as evidenced by two major contract
wins in the last quarter: one with the RAC and the other with a
major supermarket chain, for which the first 250 vehicles have
already been delivered.
Both contracts involve full
financing and maintenance of vehicles, rather than fleet management
alone.
Overall, the message that Lawes
wants his employees to take home from their next briefing is that,
despite the increase in scale seen during the last year of
business, the aim now is to keep hold of what has been gained.
“The commercial vehicles team
certainly has a hard act to follow after 2010, which was the most
successful year in its 20-year history,” notes Lawes.
“The challenge now is managing a
growing business – we’ve picked up a lot, and now we have to keep
building the infrastructure needed to support our offering on an
ongoing business.”
Hitachi Capital Vehicle Solutions
is part of Hitachi Capital (UK) PLC and a member of the Hitachi
Group, one of the largest and most respected companies trading
today.
Hitachi Capital was established in 1982 and has since expanded
to include four key finance divisions serving SMEs through to
corporate multinationals.
