Automotive Fleet

OCT 2013

Magazine for the car and truck fleet and leasing industry

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Page 53 of 81

MERCHANTS AF: So, they brought a fresh perspective? COFFEY: We take the best that's out there, blend it together with what we've already got and/or what we're building and get it out there as fast as possible as a solution for our customers, and that's what helps drive the growth we're experiencing. AF: How do you balance getting bigger, but also being the same Merchants to your existing customer base? COFFEY: We don't just provide cookie cutter lease and services oferings. I think that most of the market understands or knows that, while the majority of our leasing is open-end, we have a signifcant niche that is closed-end. With that, we don't just provide what most people would call "maintenance management." We provide to a signifcant number of our customers full maintenance and even some insurance products. Tis way we're able to appeal to both small- and midsized feets, with that product mix, and also with larger feets with that more traditional mix of open-end leases, pay-as-you-go maintenance management, and accident management services. Another important point is our key relationship managers, whether it's the originating salesperson or the customer service representative assigned to the customer's accounts, who stay with customers long term. We don't generally transfer from the originator to an account maintenance team. We try not to disrupt that relationship. Tere are a few points that diferentiate us in terms of our operations. We don't have an executive row here. If you come to visit us, in the heart of the customer service team in an open cube, sits our chairman, Gary Singer. Gary sits right in the middle of the customer service team with the head of customer service, Don Talbot, who he's worked with for 30 years, right next to him. Further down the hall, I sit next to Gary Scanlon, who is director of national accounts. Gary and I collaborate every day on our existing customers and strategize on new ones. Sitting right with us is Robert Singer our president. Tere isn't much said that doesn't get heard by the others. Further strengthening our 48 AUTOMOTIVE FLEET I OCTOBER 2013 Merchants Fleet Management's Strategic Fleet Consulting team focuses on strategic planning, feet management, and feet optimization solutions. management-employee relationship, Merchants' pres-ident, Glen Villano, is embedded with our operations team. AF: What are some of the trends or changes you see coming in the near term? COFFEY: As I mentioned, the majority of what we do today is open-end leasing with unbundled services. In the past, the majority of what we did was closed-end with full maintenance and insurance included. Tere's still a place for that. As an ofshoot of that, I think there are some interesting combinations that will be available or are available to feet customers, but they may not be aware of. For example, I know a lot of feets — bigger sophisticated feets — have been utilizing shortcycling in their feets to maximize resale gains. Everybody knows that the resale market has been strong for the last three or four years. I think the market is going to continue to be strong. Te manufacturers are not overproducing. If that trend continues, there still will be opportunities for feets to cycle out of their vehicles at opportune times to maximize resale. Tat's not always easy to do because it impacts the culture of the feet and the business. A lot of feets and their companies have very frm policies about who gets a new car and when. Flipping a driver out of their car just because resale is high is not always something you can execute. But, there are other options out there that feet customers can take advantage of if they'd like to lock in or protect resale. Tose can be everything starting from a traditional closed-end lease where you are guaranteed a payment and you're not at risk on resale. Believe it or not, it's a heck of a lot better to negotiate and obtain a closed-end package when the market is strong instead of when it's weak. Right now it's just as advantageous to consider this for a piece of your feet — maybe not your whole feet. Remember, no one said a feet customer has to put their entire feet at risk on resale when there's companies out there, such as Merchants, that can lock in their feet costs for a three or four year lease period. It doesn't have to be all or nothing. Te same thing goes even with residual guarantees. Tere is an ability to potentially lock in resale gains, even on open-end leases, if a feet customer and a feet management company can come together and agree on projected mileages, uses of the vehicle, and likely cycle times to lock-in potential sales gains in advance. Tere are ways for feets to mitigate risk or lock in resale gains or minimize a potential loss situation in advance. All the things you can do with stocks and other instruments, you can do with vehicle management services. AF: What's next for Merchants in the near term? COFFEY: Merchants will continue to invest in its customer-facing technologies. We will be rolling out a signifcantly new customer interface in the next six months that will vastly improve the technology and reporting that our customers can derive from us. We will continue to grow in the segments that we serve. Tat will be everything from traditional corporate feets to livery to buses, and just as important, government. AF

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