Global mobility leader is on track to realize agenda of its three year, strategic roadmap PowerUP 26, even as competitors look to strategic alliances and differentiation as key strategies to counter the larger entity’s impact.
In May this year, ALD Automotive successfully completed its mega acquisition of competitor, LeasePlan, to create a new entity, “ALD Automotive I LeasePlan”. In September, the company launched a three year strategic plan termed PowerUP 2026. In October, it revealed a new global mobility brand identity – Ayvens – putting a seal on a nearly two year, €4.9 billion journey that began in late 2021 and has integrated two heavyweights in the global fleet & leasing industry.
Hailed as a “strategic milestone”, the new brand name will go into effect in 2024. It seeks to create a “common identity” for the two legacy companies and accelerate Ayvens’ agenda of becoming “the leading global player in sustainable mobility”.
Ayvens is already strongly positioned in pursuit of this objective. It is the world’s leading multi-brand and multi-channel car leasing player. Its total fleet size of around 3.4 million vehicles is double that of its closest competitor. It has the world’s largest multi brand electric vehicle (EV) fleet of 400,000+ vehicles. It is a market leader in 29 of the 44 countries in which it has a presence. It has clients in both B2B and B2C segments. With its mega size, the company is on track to realize its avowed vision of making mobility “simpler, smarter, and more sustainable.”
PowerUP 26
The creation of Ayvens will energize its ambitious PowerUP 2026 plan, the successor to Move 25. The strategic roadmap sets out clear operational and revenue targets and seeks to realize them through a focus on four key areas: clients, operational efficiency, responsibility, and profitability.
Ayvens plans to expand its client base, business segments, geographic footprint, and distribution networks, while leveraging its over 400+ partnerships. Digitally led customer experiences are aimed at enabling greater personalization and flexibility in choices. Simultaneously, the company is upping the ante on its mobility-as-a-Service (MaaS) which it launched in 2022, with the aim of onboarding 200,000 active users to the platform by 2026.
From the perspective of operational efficiency, Ayvens envisions building “the most efficient, scalable, global operating platform”. Leveraging the complementary synergies of the erstwhile ALD Automotive and LeasePlan, it hopes to accrue significant improvements in resource, process, procurement, and cost efficiencies.
Sustainability is a cornerstone of the company’s long-term goals. Accordingly, there is a push to ensure that EVs comprise half of all new car registrations by 2026, a jump from the initially targeted 28% in 2022. In addition, partnerships with EV charging station provider, ChargePoint, are designed with a view to providing end-to-end solutions and winning over more than 400,000 drivers. Moreover, as an extension of its commitment to reducing its carbon footprint, the company is seeking to slash carbon emissions from its running fleet from an average of 112g/km in 2022 to less than 90g/km by 2026.
Our Perspective
The merger is symptomatic of progressive consolidation trends in the industry where financial and business restructuring became the order of the day among fleet management companies, particularly in the aftermath of the pandemic. For many, consolidation was the only route to survival as evinced by the merger of Wheels, Donlen and LeasePlan USA, with the new entity rebranded Wheels in February 2023.
One of the most immediate and obvious impacts of Ayvens will be a shakeout of the global fleet leasing and mobility industry. By sheer virtue of its massive scale, size, and synergies, we expect the company to ramp up – whether in terms of customers, market size, business segments, or geographies.
This also brings us to the potential impact that this deal will have on the competition. The merger of these two market leaders in the vehicle leasing industry has created a dominant force, pressuring competitors with increased market share and pricing competition. Competitors must innovate, enhance services, and adapt to remain relevant in a consolidated market, while also navigating potential regulatory scrutiny. Strategic alliances and differentiation will be key strategies to counter the larger entity’s impact.
For Ayvens, the merger will be advantageous in multiple ways. It will mean a larger fleet size, more dispersed global presence, wider customer reach, more comprehensive offerings to key international clients, more diverse and competitive products and services, more partnership opportunities, and a bigger talent pool to develop innovative solutions.
In addition, enhanced scale and funding will allow the development of digitally driven approaches that support more meaningful customer relationships. Larger scale will also reinforce the bargaining power of Ayvens against automotive manufacturers, many of whom are keen to enter the fleet management space as direct competitors.
In fact, improved scale has allowed Ayvens to renegotiate previous contracts with several OEMs. It also launched its first joint global tender for tyres: with four million tyres purchased annually, the company has superior bargaining power. Overall annual procurement savings are projected to be least €30 million by the end of 2023.
Already, the impacts of the merger are being felt. According to H1, 2023 results released by the company, it had an impressive 3.391 million contracts worldwide, with upticks against key parameters including funded fleet, leasing contract and services margins, used car sales, and operating expenses.
Of course, on the flip side, larger size will mean challenges related to streamlining, standardizing, and integrating two large, well-established companies. It will mean investments of time, energy and resources to establish a coherent structure and culture. It will mean needing to stay nimble and responsive to changes in the competitive environment. It will mean forestalling efforts by competitors to attack new markets or product segments at a time when its attention might be diverted by the imperatives of organizational adjustment.
That said, Ayvens looks on track to live up to its new tagline: “better with every move.”
With inputs from Amrita Shetty – Senior Manager, Communications & Content, Mobility
