Arval CEO-Philippe BISMUT first visit to Arval Jiutong
Arval CEO-Philippe BISMUT first visit to Arval Jiutong
Arval, global leader of multi-brand long term operational leasing, have reached a historic milestone in November 2016 – one million leased vehicles. Having successfully integrated the European part of GE Fleet Services, and strengthened its position in Latin America, Arval operates in 28 countries. Arval CEO, Philippe Bismut, thanks to his recent visit to Shanghai, brings the momentum to Arval joint venture in China– Arval Jiutong, which is ready to move full steam ahead.
Below are the relevant news reports：
The Global Vehicle Leasing Giant Enters China. Penetration Rate of Full Service Vehicle Leasing in China Is About to Increase
News (Reporter Fei WANG) Recently, global full service vehicle leasing leader –Arval announced in shanghai, that its first joint venture in China - Arval Jiutong (co-founded with Shanghai Baishi, fully owned by Shanghai Qiang Sheng Holding) will strive for a fleet of 10,000 vehicles by 2020, and become the biggest vehicle leasing company in China.
Philippe Bismut, Arval CEO, expressed that normally every car leasing market will pass through three phases: Phase 1,the market emerged, and the companies owned cars; Phase 2, the companies search for financing solutions for the car purchase; Phase 3, the fleet management was outsourced to a professional supplier. Currently, the market in China is right between the phase 1 and phase 2.
The reporter learns that the full service vehicle leasing refers to the long term vehicle leasing services for clients, normally with a duration from 2 to 5 years. The client should pay monthly fees based on the services, including vehicle usage, funding, buy and delivery, registration, maintenance and repair, tyre service, fuel management, insurance and accident management, road assistance, end-user solution, relief vehicle and chauffeur services, etc. When the contract terminates, the returned vehicle will be sold at the used car market. And then the leasing supplier will renew the agreement with the client and provide a new vehicle, etc.
It is learned that Arval, founded in 1989 and fully owned by BNP Paribas, is the European leader in full service vehicle leasing, covering 28 countries, including South and North America, Europe, Middle East, Africa and Asia Pacific regions. “In Europe, the penetration rate of full service vehicle leasing is of 25%, but only 1% in China; furthermore, the top 10 full service vehicle leasing companies take up 80%-90% of total market share in Europe, which indicates that China market is still young.” Philippe Bismut believes that if there were 300,000 leased vehicles in China market, Arval Jiutong’s current market share would be of 1.5%. While in Europe, Arval occupies 12% market share. Arval Jiutong’s ambition in China is to have 10% market share.
BNP Paribas invests in the high potential vehicle operational leasing market
Currently, along with the progress of interest rate liberalization, the profit model of traditional commercial banks, which relies on the interest rate spread, are facing huge challenge, while the asset management business, specialized in creating the intermediate business income, rise up rapidly. BNP Paribas, after investing in automobile finance, insurance, and quite a few equity investments in the mainland China, has stepped into the vehicle operational leasing business.
On March 7th, Philippe Bismut, CEO of Arval, fully owned by BNP Paribas, visited China. He announced that Arval had achieved the milestone of 1 million leased vehicles. and claimed that he would like to bring this strong momentum to Arval Jiutong, Arval’ joint venture founded in China in 2015, and focused on the full service vehicle operational leasing, in order to bolster the JV’s full speed development.
Today, the full service vehicle leasing business is still at the primary stage in China, and has a huge potential. Philippe Bismut, CEO of Arval, told CBN that they entered vehicle leasing sector, because they think highly of the potential of this business. Currently in Europe, the penetration rate of full service vehicle leasing is about 25%, but only 1% in China, which indicates hug potential of China market.
“Compared to the mature markets in Europe, vehicle leasing in China has its own peculiarity ”, Tero TAPALA, general manager of Arval Jiutong, told CBN, “the clients in China are currently at the stage of buying and owning private cars. There are still far less demands for car leasing and it takes longer time find the clients.”
CBN reporter learns that Arval is fully owned by BNP Paribas, and it belongs to retail bank, one of the the core businesses of BNP Paribas. Arval owns over 1 million leased vehicles across 28 countries and claims a leading position in vehicle leasing, occupying circa.12% market share in Europe. China is the 25th country market where Arval operates directly.
Currently, Arval Jiutong has a fleet of over 4000 leased cars, 160 experienced talents and a strong service network covering 53 cities. Arval Jiutong has advanced fleet management system, which provides high quality full service vehicle leasing solutions to domestic and overseas corporate clients. Meanwhile, Arval Jiutong has vast service networks to provide standardized comprehensive services to clients all over China.
In fact, it’s still new in China for a bank to enter into the vehicle leasing sector. But in Europe, the profit model of traditional commercial banks, which relies on the interest rate spread, has been largely challenged, many banks has invested in the vehicle leasing for more than a decade, to diversify their business models.
According to Bismut , BNP Paribas will support Arval not only financially, but at the same time share the client information with Arval. The vehicle leasing company can understand the clients’ needs through the bank channel, while the bank can get the client resources from the vehicle leasing company, which is a win-win situation.
Previously , the BNP Paribas Personal Finance has invested in China auto financing industry, by co-founding with Geely, an auto financing company, to provide funding services for new and used car markets. Meanwhile, BNP Paribas keeps close cooperation with Bank of Nanjing, and Suning Appliance, on the consumer finance. In recent years, BNP Paribas also engage itself in various equity investments in mainland China financial institutions, including the continuous increasing of its holdings in Bank of Nanjing, which makes it the biggest shareholder of Bank of Nanjing, and the purchase of 50% share of BOB-CARDIF Life Insurance Co. Ltd., etc.
Arval Jiutong to achieve 10,000 vehicles in China by 2020
After the global leadership has been strengthened by the milestone of one million leased vehicles across the world, Philippe Bismut, Arval CEO, recently announced in Shanghai that Arval Jiutong, Arval’s joint venture in China, is expected to set up a successful business sample in Shanghai and then duplicate it across other cities of China, in order to achieve the strategic objective of a fleet of 10,000 vehicles by 2020, and become the biggest long term vehicle operational leasing company in China.
Arval is a leader in full service vehicle leasing in Europe, covering 28 countries. In October, 2015, Arval and Shanghai Bashi Rental, 100% owned by Shanghai Qiang Sheng Holding Co. Ltd., co-founded Arval Jiutong, of which Shanghai Bashi owns 60% of the total share and Arval owns 40%. Currently, Arval Jiutong has a fleet of over 4300 leased cars, nearly 130 experienced talents and a strong service network covering 52 cities.
“2016 was a tremendous year. We achieved several major objectives: Firstly, we delivered the Europe-wide integration programme of GE Fleet Services, covering more than 160,000 vehicles in 12 countries. Secondly, we acquired Relsa in Brazil and set up an alliance with the same group in Chile and Peru, for the business of around 30,000 leased vehicles. All of these led Arval to achieve the milestone of one million leased vehicles worldwide in November last year. This unprecedented performance had consolidated Arval's leadership in the European multibrand leasing market and its status as a key industry stakeholder at global level.” said Philippe Bismut, “in Europe, the penetration rate of full service vehicle leasing is of 25%, but only 1% in China, which indicates that this is a young market, with huge potential. Arval Jiutong is striving for 10% market share in China.”
JV seeks fleet growth
ARVAL Jiutong Co, a joint venture between Arval and Shanghai Bashi Car Rental Service, expects to expand its fleet to 10,000 vehicles in China by 2020, a surge of 132 percent from 4,300 vehicles covering 53 cities now. “We are planning to further expand our business to cities like Ningbo, Wuhan and Wuxi in the coming years,” said Tero Tapala, general manager of Arval Jiutong.
The Ambition for No. 1 in Vehicle Leasing Market - Arval Jiutong Plays Against “Three Giants”
Reporter: Xinxiao Huang in Shanghai
Along with the continuous growth of the vehicle leasing market, the actions of each player in China draw high attention.
Days ago, Mr. Philippe BISMUT, CEO of Arval and other representatives visited Shanghai China. “Arval Jiutong has a great ambition of achieving a fleet of 10,000 vehicles by 2020.” Mr. BISMUT announced this strategic objective at the press conference. Other representatives from Arval also said that Arval Jiutong would make the localization adjustment to achieve it. However, they said that currently it was improper to disclose the detailed action plans.
Arval Jiutong expressed its full confidence to achieve this target. However, as a latecomer, could it be successful in such a fiercely competitive and ever-changing Chinese market?
Accelerate Localization Strategy
Days ago, Mr. Philippe BISMUT, CEO of Arval and other representatives visited Shanghai China, and introduced Arval’s future development plan.
When interviewed by the reporter of China Business Newspaper, Mr. Philippe BISMUT, CEO of Arval said: “Arval 100% devotes itself to accelerate Arval Jiutong’s business in China. Thu we also set a great growth target for Arval Jiutong to achieve the strategic objective of a fleet of 10,000 vehicles by 2020, and to become the biggest vehicle leasing company in China.
However, Arval said it was improper to disclose the detailed action plans. Mainly, Mr. BISMUT mainly expressed that they would firstly output client resources and technology from the parent company: “Arval will output the best practices in other markets to Arval Jiutong, such as the client relationship, service, operation and remarketing. Besides, Arval can also bring certain advanced technology to the joint venture, including latest IT technology, digitalized applications, which will further improve the efficiency in fleet and chauffeur management.”
In order to explore the Chinese market quickly, Mr. Philippe BISMUT, CEO of Arval, said that Arval Jiutong gained the support from Shanghai Municipal Government and Bashi Car Rental Company. Besides, Mr. Tero Tapala, a representative from Arval stressed:” We believe that we gain great support from Qiangsheng Holding, a local company with great reputation. Along with its local wisdom, we believe that Arval could grow more smoothly in China.” In terms of current situation, the cooperation between Qiangsheng Holding and Arval positively drove the development of the business.
The leaders from Arval thought that China market had its specialty. For example, compared to the market in the west, there were demands for the used car leasing. Thus Arval Jiutong should make the localized strategic adjustment by providing used car leasing. Besides, some insiders expressed that the governmental official cars reform would also bring quite a lot opportunities to the vehicle leasing market, and Arval Jiutong should take the opportunity to make the adaptive scheme. There were a lot of similar challenges and difficulties, which Arval Jiutong should conquer in the aim of adapting to China market and providing the products and services of world class. Although Arval is full of confidence, can they grow as they planned in terms of current China market?
Unstable Market Structure
According to the data shown on China Industry Information Website, the vehicle leasing industry in China is still at the early stage with big growth in recent years. Compared to the mature markets in the US or Japan, penetration rate of the vehicle leasing industry in China is very low. According to the data from Roland Berger, the penetration rate of the vehicle leasing industry in China is only 0.4%, while the rates in Japan, US and Brazil are 2.5%, 1.6%, 1.3% separately. According to the notice of promoting the healthy development of vehicle leasing industry issued by the Ministry of Transport, the next 5-10 years would be the key period for the development of vehicle leasing industry. The Ministry of Transport will strengthen the industrial management and promote the regulated development. Although it is a new market, there will be bright future for the vehicle leasing industry in terms of both the trend of macro economy in China and also micro social foundation.
According to the related research report, currently, the market is highly fragmented, and the top 10 vehicle leasing company only takes 12% of the market share. According to the data shown on China Industry Information Website, currently the domestic vehicle leasing industry is in a structure of “three giants”: I. the branches of international vehicle leasing companies, mainly two giants from the US – Hertz and Avis. However, due to the incomplete domestic industrial regulations and personal credit system, it certainly will affect their adaptation and distribution process in China; II. Domestic private companies, currently, mainly are CAR, eHai and Zhizun. Their scales are among the highest in China. They provide related complete service. However, compared to the international companies, they are lack of competitiveness in terms of modern management, reputation and scale; III. The branches of manufacturers in China, such as Shouqi, VW and Zhongjin. They are the main directions of state-owned enterprises in new business exploration. They have unique advantage of resources. Although currently in small scale, they will have great advantage in the future growth. The structure of the market has formed but is far from solid.According to the public data, Avis-Anji, a vehicle rental joint venture, founded in 2002, has a fleet of 6,000 cars. Shouqi Rental, founded in April 1992, has a fleet of around 10,000 cars. Dazhong Car Rental, established in 1993, has a fleet of around 4,000 cars. Arval Jiutong is established in 2015 with a fleet of 4,300 cars.
Among those vehicle leasing companies, Arval Jiutong possesses its competitiveness of a joint venture, and modernization and technology are their advantage, while late market entry is their disadvantage. Mr. BISMUT said that the Chinese market demonstrated a great potential of growth, in which their were interested and full of confidence. Mr. TAPALA said: “We would like to use the opportunity in Chinese market, which also requires us to demonstrate to our client that we can provide high quality service.” For Arval Jiutong, there are lots of opportunity in Chinese market. The key to breaking through the market will be timely adjusting the development plan in China and selecting the suitable scheme.
The vehicle leasing market in China is at the early stage and the car leasing industry is growing slowly. No leasing company firmly takes a majority share of the market. And there will vast potential and unknown territories for the vehicle leasing industry in China. In order to adapt itself to the local market and to achieve its strategic target, Arval has surely been starting a long journey full of difficulties and challenges.
Qiangsheng Holding hands up with Arval to strive to achieve the strategic objective of a fleet of 10,000 vehicles by 2020, and to build the biggest vehicle leasing company in China
Reporter Lei Li
Arval, a leader in full service vehicle leasing in the world, announced in Shanghai yesterday that Arval Jiutong, its first joint venture in China (jointly established with Qiangsheng Holding’s fully owned subsidiary - Bashi Rental) set a great growth target to achieve the strategic objective of a fleet of 10,000 vehicles by 2020, and to become the biggest vehicle leasing company in China.
Provide long-term leasing service to the clients
Founded in 1989 and fully owned by BNP Paribas. Arval is a leader in full service vehicle leasing in Europe, covering 28 countries and markets, including South and North America, Europe, Middle East, Africa and Asia. Arval’s total leased fleet adds up to 1,000,00 vehicles throughout the world in November 2016. On October, 2015, Arval and Bashi Rental, 100% owned by Shanghai Qiang Sheng Holding Company Limited, founded Arval Jiutong, the joint venture, among which Bashi Rental took 60% of the shares while Arval took the rest 40%. Currently, Arval Jiutong has a fleet of over 4300 leased cars, 130 experienced talents and a strong service network covering 52 cities.
The full service vehicle leasing means that the company provide long-term vehicle leasing service to clients, normally 2-5 years. The client will pay certain fees based on the services by month. The services include vehicle leasing, financing, buy and delivery, registration, maintenance and repair, tyre management, fuel management, insurance and accident management, road assistance, solution for the car user, replacement vehicle and chauffeur service, etc. When the contract expires, the vehicle would be returned and be sold in the used car market. And then the company would sign a renewal contract with the clients to provide another new vehicle, etc.
Strive to achieve 10% market share in China
“It’s our strategical priority to develop Chinese market.” Mr. Philippe Bismut, CEO of Arval said, “currently, China is the biggest automotive market in China. However, the penetration rate of full service vehicle leasing is not high, which means that there is great potential in Chinese market. Normally there would be 3 phases in the vehicle leasing market: Phase 1: the market emerged, and the companies owned cars; phase 2: the companies owned cars in a financial way; phase 3: the fleet management was outsourced to a professional company. Currently, the market in China is at the interim period from phase 1 to phase 2.
“In Europe, the penetration rate of full service vehicle leasing is 25%, but only 1% in China; besides the top 10 full service vehicle leasing companies take up 80%-90% of the market share, which proves it to be a young market.” said Mr. Philippe Bismut. If the market volume is 300,000 vehicles, currently, Arval Jiutong’s market share is 1.5%. But in Europe, Arval’s market share is 12%. Arval Jiutong’s ambition is to strive for 10% of the market share.
An insider mentioned that China is now undergoing the official car reform, which bring great growth potential to the car leasing market. Besides the multinational companies, large companies, the government and public service units also have great demands in the full service vehicle leasing. Arval Jiutong said that they were actively making the proposal for the market.
The best practice can be copied to other cities
Arval Jiutong’s target is to achieve a fleet of 10,000 vehicles by 2020. What are the advantages of the cooperation between Arval and Shanghai Bashi Car Rental?
Arval has an information system, covering the global market, on which all services in the global market can be optimized. The report generated by the information system can improve the internal efficiency. Meanwhile, the client and drivers can also access to the information. The system also include the mobile phone APP, which can provide online reservation of cars. Currently, this system has been adjusted locally, and it was official launched in Arval Jiutong 2 weeks ago. Before the establishment of Arval Jiutong. Bashi Car Rental is the biggest full service vehicle leasing company in Shanghai, which was familiar with the Shanghai market and owned around 6,000 cars. The cooperation between these two companies wins the opportunity of cross selling. Arval Jiutong can copy the best practices to other cities in China. If a client would like to lease a car in other countries, he can search for the suitable service with the help from Arval’s vast global system.
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