Societe Generale's ALD Automotive bullish on India car lease biz

Mumbai: It is the world’s third largest player in car leasing, with nearly a million vehicles in 37 countries. Yet, ALD Automotive, the 100 per cent arm of the Societe Generale Group, has little to show in India, with just 8,000 cars leased over the past seven years.

All that is going to change, reiterates Tim Albertsen, Deputy CEO of ALD International, who was here recently to review operations. “We plan to double our size to over 15,000 units in the next three years given India’s potential,” he told Business Line.

While Western Europe accounts for a lion’s share of the ALD fleet with nearly 8.5 lakh leased cars, Albertsen says things will change dramatically during the course of this decade. Brazil, Mexico, Turkey, Russia and India are now seen as countries with tremendous potential.

Oddly enough, China has not taken off even though it is the world’s largest car market today. ALD started operations there in 2005 - around the same time as India. Yet, the country accounts for only 1,500 cars. “China is still five years behind India because the company car market has not developed. Only the top management gets a vehicle,” Albertsen says. He also believes India will catch up with Russia (which is comfortably ahead now) and actually beat it in five years.

Admitting that the market here is “not where it should be,” Albertsen says the time has come to take business to the next level.

Indian companies are going global and increasingly seeking ALD’s leasing services in other countries. In addition, the SME (small and medium enterprise) market here is promising. “We need to target them as they are critical growth drivers,” he says.

Suvajit Karmakar, CEO of ALD’s Indian operations, says it is important to reach out to SMEs and explain the benefits of leasing, especially from the viewpoint of better cash flows. “We are seeing a good response to this effort,” he points out.

According to him, in the West, mobility is imperative for sales personnel, rather than for the CEO. In India, conventional hierarchy allows the top management a car while the sales team uses public transport.

Karmakar makes an interesting point on some Indian pharmaceutical companies with operations in Russia. “They give cars to each of their medical representatives in the country while it is the exact opposite in India, where only the senior management is entitled to this, ” he says.

However, things are gradually changing. “We are seeing a trend where companies are leasing cars for their sales people because they realise employee retention is important,” Karmakar says.

Another critical customer base for ALD in India comprises agriculture companies whose operations are largely in rural areas and employees “cannot wait forever for a bus”. This perhaps explains why ALD has a sizable fleet in Andhra Pradesh, which is home to many agriculture ventures.