LeasePlan plans Rs 2,400 cr spread on larger fleet

Bullish on the Indian market, the Netherlands-based fleet management company LeasePlan Corporation plans to spend Rs 2,400 crore to increase its fleet size five-fold to 50,000 vehicles by 2012.

"The Indian market is growing and more and more corporates are opting to lease fleets than buying cars. To support this growth, we plan to increase our fleet strength from 10,000 vehicles to 50,000 vehicles over the next six years," LeasePlan India Managing Director Veerle Behets said here.

LeasePlan India is a joint venture between LeasePlan Corporation (51 per cent) and UK Paints (49 per cent) and has been in India since 1999.

German car giant Volkswagen holds the majority 50 per cent stake in LeasePlan Corporation, which manages a fleet size of 1.3 million cars with over 75,000 clients across countries.

Behets said funds for fleet expansion would be arranged primarily through bank loans.

LeasePlan provides end-to-end fleet solutions and has over 500 corporate clients in India that include the Tatas, Coca-Cola, Whirlpool, Novartis, Nicholas Piramal, Godrej and Philips.

Behets said fleet leasing market in India was expanding as more and more corporates prefer to hire cars than buy them, which proved to be expensive.

"Our studies and experience has shown that hiring of fleet, where corporates contract our cars for around 3-4 years, is a beneficial proposition for them as they do not need to block funds and need not worry on aspects such as maintenance etc," she said.

Even as it witnesses growth and acceptance by corporates, the fleet management business in India has been more of a sole domain for LeasePlan with not many players operating at its level. Behets said that companies such as ALD and Orex had entered the market while Arval, a subsidiary of BNP Paribas, is all set to debut.

"We feel that the the new companies will help in the expansion of the market, though we are certainly gearing up to tackle competition by enhancing our basket of products and services," she said.

Behets said currently corporates outsourced fleet requirements primarily for their sales and technical staff and also for use by its mid-level officers.

"Around 40-45 per cent of our fleet is comprises compact cars while a similar percentage is of mid-size or C segment cars. Currently, luxury cars are a small percentage and the level of outsourcing for senior staff is not much," she said.

The fleet leasing market in India has matured to levels of developed countries, she said.

LeasePlan India currently offers services in around 100 Indian cities. It has revenues close to Rs 360 crore through its current leasing portfolio and Behets said the company has been making profits since 2002.

Apart from long-term leases, the company has recently forayed into the car rental business as well. "We have also moved into the car rental segment as it is also growing and helps us tap new clients for the mainline lease business," Behets said.

For the car rental business, LeasePlan will have to compete with players such as Hertz and Sixt.