Posted on Friday 10 May 2013 by Ulster Business

Fleet Financial

Philip Miley (left) and Colin McNab.

It would have been easy to assume that when Charles Hurst bought contract hire and leasing company Fleet Financial last year, the motoring group planned to install its own management team to take over the running of its book.

But in acquiring a market leading business, Charles Hurst saw no reason to change the team or the business model that had brought Fleet Financial success in its first 16 years as an independent company.

Instead, Fleet is now operating as part of a group that gives it added financial strength and additional resources in all aspects of the motor trade and enhances it's offering to clients.

"The rationale behind the deal was to strengthen Fleet Financial as a company," explains Philip Miley, the firm's Sales & Marketing Director. "As an independent we had come as far as we could in our growth strategy. From year one to year 16 we saw continuous growth. But to continue to improve this business and provide an even better service we saw the need to get a bigger ship alongside us."

Charles Hurst also saw bringing Fleet Financial into its group as a means of strengthening its own contract hire offering, adds Colin McNab, Operations Director of Charles Hurst.

"It is important to understand that we wanted to strengthen that part of our business. We did have a leasing arm within the company, but it wasn't a market leader. We were finding that the business customer wanted a wider choice and wanted more expertise around how they could finance their vehicles in the most cost effective way," he says.

"When Charles Hurst bought Fleet Financial we decided not to make any radical changes to the business, the expertise was already there."

Established in February 1996, Fleet Financial has grown year on year and now manages close to 4,000 vehicles – a milestone it expects to break through by the end of this trading year. Its customers range from some of the province's best known companies – including Graham Construction, Gilbert-Ash, Phoenix Gas, Dale Farm and SHS Group – to GB-based plcs like Sky Corporation and C&C Group, to sole traders and small firms.

Fleet continues to negotiate its own terms with manufacturers, controls the discount and can buy from the whole dealer network. But being part of Charles Hurst group means it now has more support from both local and national finance lenders.

"The acquisition has created competitiveness among our lenders," says Philip Miley. "One of the major benefits to our customers is that our finance rates are more competitive. Prior to the acquisition we had two funders; now we have five funders who all want a slice of the action. The reason we have five funders is because of Charles Hurst's balance sheet – the scale and strength of its business.

"We now have a suite of local banks alongside us, helping us. Because of the nature of that competitiveness our finance margins have been enhanced. We were already competitive in our offering, now we are even more competitive because of our enhanced negotiating power."

WHY CONTRACT HIRE?
Although Philip Miley acknowledges that there has been an increase in competition in the contract hire sector in the last 18 months, he points out that Fleet Financial is having its best trading year so far and is aiming to supply over 1,200 vehicles in 2013.

And the message about the advantages of contract hire over purchasing vehicles that immediately become a depreciating asset, is one that more and more businesses are listening to.

"In the past five years cash rich companies have been keen to keep their cash in the business to use as working capital. Compared to 15 years ago, people now look at their motoring needs nearly like they do their electricity use. It is a function within their business. Ownership is not important. Having a fixed cost to the business is really appealing, so contract hire is much more on the radar, the business community is much more aware," he says.

However, there is still a section of Northern Ireland's SME-dominated business community who aren't aware that the benefits of contract hire are also available to them.

Colin McNab elaborates: "Fleet Financial the name might conjure up this idea it is just for large companies but it is for every business, from one man bands to small businesses with a few vans on the road.

"Whatever size of organisation they have, people who are running businesses are busy. They don't want to be seeing the Renault salesman one day, the Nissan sales man the next day, Citroën the next day. They want someone to come to their premises and say 'here is the suite of offers we've got and here's how we can fund this cost effectively'," he adds.

McNab believes many business people will have always bought their vehicles or funded their cars a certain way but perhaps are not aware it is no longer the most cost effective way to do it.

"Some people spend so much time focusing on keeping their vehicles on the road and not focusing on their own area of expertise, their own business," he comments.

"There are a lot of potential customers out there whose eyes we'd like to open to a whole new range of options of funding. It frees them up to think about their own business."

Philip Miley further explains: "If you think of mobile technology look how much has changed. Our industry, in terms of motor needs, has changed as much as phone needs. There is a different world out there with the introduction of government legislation around CO2 and capital allowances combined with the greatly increased choice on low CO2, hybrid and electric vehicles.

"Transport is the second largest overhead for most businesses after wages so why do people not spend more time on looking at it and asking if they are doing it right. Every Northern Ireland business has a transport need and we are happy to provide advice on that to everyone, from one vehicle up. I would be confident that if people give us 15 minutes of their time that we could save them money."

While the phrase "one-stop shop" is an overused one, the management of Fleet Financial and Charles Hurst clearly believe that the options they are able to provide, trump the competition. Both Philip and Colin are confident that having proved the worth of their brands to local businesses over the years, the alliance will simply create more reasons to work with people they already trust.

"We have both been in the business a long time and so have the majority of our senior team," says Colin.

"People know that they can ring myself or Philip to get something sorted out quickly because we have that reputation within this sector. We have the philosophy of wanting customers to keep on coming back to us – one of our core values is that we want customers for life."

Colin notes that in the same way Charles Hurst wasn't renamed Lookers NI when it became part of the GB-based parent company Lookers plc, Fleet Financial won't be renamed Charles Hurst Leasing.

"It is the same people driving this business," adds Philip Miley. "We have a new owner, but on a day-to-day basis it is business as usual. The team is the same and has actually been enhanced because we've added to our sales force."

Five new sales people have joined in the last year in Northern Ireland and Fleet Financial has also added two in GB, where it runs around 700 vehicles for Northern Ireland companies, with plans to recruit three more in the coming year and develop the brand in the mainland marketplace.

Philip Miley has long felt there was an opportunity to bring its successful model into the wider UK marketplace, and Lookers is now keen to back that move as a means of strengthening its own leasing operation.

"We knew the model worked but we didn't have the financial resource to make that step. In the next five years I feel that we could get our volumes on new contracts up to what we have here currently because it is a bigger market. If we're doing 1200 units this year we can grow to that quite quickly in GB if we get the model right," explains Philip.

"It is a natural progression. We plan to maintain our position in Northern Ireland and grow it year on year. Our head office is here and we remain here. But we also want to be proactive and not sit back on our laurels. This is an opportunity. I'd love to think we could have a top 10 Contract Hire company with 6,000 vehicles. Having that ambition will benefit both our existing and new customers over the next five years."

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