ALD | LeasePlan releases “PowerUP 2026” strategic plan

Today, industry leader ALD-LeasePlan (ALD-LP) presented their ambitious strategy, "PowerUP 2026," during a press conference, led by Tim Albertsen, CEO (picture) and Patrick Sommelet, Deputy CEO and CFO, which featured a comprehensive overview of their vision for the future of mobility and fleet management. The event showcased their commitment to leading the charge in addressing global megatrends, embracing sustainability, and achieving operational excellence.

Megatrends in the Market

As a global provider, ALD-LP needs to respond to the major trends happening within the corporate fleet ecosystem. Tim Albertsen, CEO highlighted the following megatrends:

• Electrification: ALD-LP recognizes the growing importance of electric vehicles (EVs) and aims to leverage their position as a leading player in the market to drive EV adoption.
• Behavioral Changes: Acknowledging shifting consumer preferences towards usership, flexibility, and used car leasing, ALD-LP aims to continue adapting their offerings accordingly.
• Digital Transformation: The company intends to embrace digitalization, reflecting changing customer expectations and emerging technologies.
• Emerging Ecosystem: ALD-LP will explore new services and partnerships to stay at the forefront of innovation.
• Competition: In a fiercely competitive market, the company will seek opportunities for partnerships.

ALD-LP Leadership Position

ALD-LP holds, post-acquisition, the number 1 position at “double the size” of its closest competitor. Tim Albertsen adds that the company manages a fleet of 428K EVs, reaffirming its commitment to electrification.Market leadership does not reflect only in fleet size, but also in sourcing power; as such, ALD-LeasePlan is the largest buyer in the market. Finally, Albertsen highlights the company’s strong financial profile, with the best debt credit rating in their segment.

Strategic Ambitions

Starting from pole position, the "PowerUP 2026" strategy is designed to leverage and reaffirm ALD-LP's leadership position. Key objectives include (amongst others):

• Multimodality to offer diverse and flexible mobility solutions.
• Aiming for a +6% Compound Annual Growth Rate (CAGR) in earning assets.
• Achieving operational efficiency, with a target of 440 million euros by 2026 and a cost-efficiency ratio of 52%.
• Committing to sustainability, with a goal of a 50% EV share in the fleet by 2026 and reducing the running fleet emissions to below 90g/km.
• Targeting profitability with a Return on Tangible Equity (ROTE) of 13-15% and a dividend payout ratio of 50%.

Product Focus

Strategic ambitions ultimately translate into product offering. On this topic, Albertson lays out the company’s focus on the following products and targets:

• Flex and Multi-Modal Products: Offering flexible solutions to meet evolving customer needs.
• Used-Car Lease: Expanding their presence in the second-hand car leasing market.
• LCV: Catering to the light commercial vehicle segment.
• Subscription Models: Exploring new ways to engage customers.
• Global Reach: With a presence in 44 countries, ALD-LP will continue to focus on blue-chip companies.
• Distribution: Exploring new brands and partnerships to extend their reach.

Sustainability

ALD-LP intends to make sustainability a central part of their client approach and internal operations, which translates into

• Making it easier for clients to choose electric vehicles.
• Utilizing Mobility as a Service (MaaS) as a tool for sustainability.
• Enhancing operational efficiency for customers to run an EV fleet.

Corporate Responsibility, Risks and Financials

The company is committed to fostering talent and achieving responsible corporate governance. This includes an HR transformation program and an anticipated representation of women in leadership positions to 35%. ESG initiatives include electrification, reducing their internal footprint, maintaining ethical conduct, and including circular economy in their sourcing strategy.

ALD-LP acknowledges the need for robust governance and the influence of regulation via SocGen and supervision by the ECB. On the financial front, they target a 6% CAGR in earning assets, a cost/income ratio of 52%, and a ROTE of 13% to 15%. The "PowerUP 2026" strategy incurs a cost of 525 million euros, with anticipated (pre-tax) synergies of 440 million euros by 2026.

Q&A Highlights

During the Q&A session, several key points were addressed:

• EV Residual Values and Risk: ALD-LP recognizes the challenges in EV pricing and has formed a task group to address them. They see potential in second/third life leasing to spread profitability targets over a longer period.
• Cost to Income Ratio and ROTE: Factors such as rising car prices, logistic challenges and the need for a strong capital structure contribute to the cost/income ratio. ALD-LP explained changes in capitalization and increased IT costs as influencing factors.
• Contribution of LATAM and APAC to strategic targets: While most (Albertsen: “80%”) of ALD-LP's business remains in the EU, they acknowledge growth opportunities in Latin America (LatAm) and the Asia-Pacific (APAC) regions.
• Chinese OEMs: ALD-LP considers Chinese OEMs as valid players in the market and evaluates partnerships based on quality and service.
• IT Cost Revisions: The company is investing heavily in a new system, which has driven up IT costs. Sommelet remarks that these costs will need to be reconsidered in the future.
• Integration Costs: Initial estimates were based on industry parameters, but real information suggests higher integration costs, which the company deems realistic.
• Volume Targets: ALD-LP shifts its focus beyond fleet growth (number of cars) to asset growth in monetary terms, reflecting the increased value of vehicles in their portfolio.
• Impact of Taxation/Subsidies: ALD-LP expects subsidies for EVs to decrease over time, emphasizing that competitiveness should come from the market rather than from government incentives.
• UK ICE Ban Postponement: ALD-LP acknowledges the political realities surrounding ICE bans and believes that the transition to electric vehicles will take time, with ICE vehicles likely to remain popular for years to come.

Conclusion

In conclusion, ALD-LeasePlan's "PowerUP 2026" strategy sets the stage for a transformative period in fleet management and mobility solutions. With a strong focus on sustainability, innovation, and operational excellence, ALD-LP presented today a plan to remain a leader in the industry.