ALD Automotive, a 100% subsidiary of the Societe Generale Group, is a leading French originated automotive mobility service provider. Its Indian arm ALD Automotive India, established in 2005, is a leading fleet management company dealing in operational leasing, offering a wide range of comprehensive mobility solutions to help take care of companies fleets.
Mr. Suvajit Karmakar, CEO, ALD Automotive India, talks to us about the advantages of leasing and how ALD Automotive has carved a niche for itself in the Indian market.
Excerpts:
Company overview and services offered
ALD has being in India for over 10 years. We were catering to the large corporate customer segment for its employee and business car requirements and wherever there was requirement of light commercial vehicles in the existing clients, the same was being catered to by us. There is a good opportunity in this segment since the lease option is not explored in LCV segment. To tap this opportunity, ALD had started a separate vertical for LCV leasing. Currently we are leasing to all types of corporates and SME customer for various kinds of usage. However, for now we are not entering the individual segment.
Impact of demonetization
Since our customers are corporate where we haven’t seen much impact, it has affected our remarketing area (the vehicles which are returned and then sold back into the market) with our stocks piling-up as the brokers who buy these vehicles were not coming forward to buy. However, the situation has improved since beginning of January.
Business model
Our business model is to give out vehicles on a long-term lease contract. In our pricing, interest is just one of the many factors. Pricing also factors in the residual value and the cost of service. Overall, we offer a complete value to the customers. As a package, it (leasing) works out better on the cashflow compared to taking a loan.
Key USPs
Leasing transaction is more beneficial to a customer as it improves his cashflow because the lease rental is fully deductible from the P&L (Profit and Loss) whereas in the case of a loan you can claim only depreciation and interest cost and other expenses related to the vehicle. Moreover, with our fleet management services, it’s a one-stop shop for our customers. It helps them in managing their administrative better and avoid any unplanned costs. As the customer has to pay us a fixed monthly lease rental irrespective of the costs incurred by us. This also reduces their business risks and with each business becoming more challenging and demanding, our customers can focus on their core business while we efficiently manage their fleet. We also provide bundler services such telematics, vehicle tracking, body building thru partnership tie-ups.
Target customer profile
The criteria which we look for while leasing CVs are the number of years and stability in business, bureau records of the customer, financial standing of the customer, association of the customer with its principals and the potential for growth.
Partnership with OEMs
Currently we are working on the OEM tie ups directly, through their dealers and parallelly we are also sourcing customers directly.
Association with CV dealerships
We have tie-ups in certain cities with the dealerships and working closely with them for sourcing of business. A CV dealer is the first point of contact for a customer. Dealers are very well aware of the credibility of the customer, since the association of the dealer with the customer happens to be old as compared to financiers. Dealers provide the important information about the contracts, etc., for the customer, which in turn help in assessing the customer’s credibility. We like to pitch our products jointly to the customers as such requirements also need us to work closely with manufacturers, dealer, body builders and other ancillary support companies.