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Follow the market and lead the way
Page 70
Page 71
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Less than two years after dramatically increasing its presence in the UK market, truck rental and contract-hire specialist Fraikin is ready for further changes. Kevin Swallow reports.
At the end of 2005 truck-hire specialist Fraikin dramatically increased its presence in the UK rental, contract-hire and fleet management sector by acquiring the commercial fleet division of Lex Transfleet.The deal turned Fraikin into one of the top three players in the UK LGV contracthire market.
Before that,says technical director George Noble,who joined in 2(101, Fraikin had fallen between two stools."Our fleet was around 2,100 vehicles — too small for major fleet customers and too large for the local market."
The acquisition of Lex Transfleet increased Fraikin's vehicle count to 15,000 and its staff levels to 560, and more than doubled the number of its UK sites to 22 outlets. At the time (CM 1 December 2005) MD John Ball refused to rule out further acquisitions Since then Fraikin has been busy absorbing the additional stock and moulding the employees in its own image as it works to achieve customer retention of more than 60%.
Moving forward
Now it is ready for the next step. In February private equity business CVC bought a controlling interest in Fraikin from major shareholder Eurazeo. Noble says: "Fraikin will grow substantially once this consolidation is completed. It will grow its core products: contract hire, rental and fleet management." Fraikin specifies and buys vehicles, leases or hires them to customers, then remarkets them at the end of the contract.At the Birmingham depot Chris Butcher, head of used sales, has a yard full of end-of-life vehicles ranging from boxvans, gully suckers, medical delivery trucks and drawbar hookloaders to run-of-the-mill stock.
Butcher points to several Vauxhall Movano panel vans.They are five years old, have 120.000 miles on the clock and are fitted out as service vans."The extra value is in what they are,he says. "They are worth £5,500 as service vans,L3,500 as just vans" Noble adds: "We are trying to sell used vehicles with a known pedigree, in decent condition and fit for a decent second life."
Conventional stock is out on three-year deals with specialist products running for five years Fraikin sells stock from an inventory that is prone to change if customers hold on to vehicles Butcher says: -It's working off a list where something might be
deferred for three months.You can pre-sell them to an extent,but that's hampered by long lead times and people holding on to vehicles"
Market distortion
Long lead times and the introduction of digitachs and Euro-4 have distorted the market, while the EGR/SCR debate confused the industry, says Noble. As for AdBlue, he comments:"It was a fuss about nothing. People remember to put windscreen washer in, top up the oil, even put in antifreeze once a year; what's the big deal about putting another liquid into a tank?
The market didn't perceive it that way and increasing the size of the tanks to a service interval period is a reasonable solution. Euro-4 and digitachs hurt the industry from May last year. [Fraikin] did virtually nothing up to the end of the year and that was due to a lack of decision.
"One of the problems last year
was there weren't enough driver cards around so we kept analogue vehicles out there.We bought 327 Euro-4 vehicles into the fleet and the utilisation of these vehicles has held up."
When digitachs arrived in May 2006 only 10% of Fraikin's customers were compatible. Now more than half have driver cards As the market shows signs of settling, he has noticed a shift away from 7.5-tonners, with licences and speed limiters fuelling a move towards vans and 12/13-tonners.
Whatever happens, Fraikin has to follow the market. says Noble. "We spend a lot of time getting the right solution, understanding customers' requirements and finding the right vehicle.
"We are a largebusiness.We try to remain nimble and customerfacing, and retain some of the feel of where we came from a sort of family-owned business concerned about the ongoing relationship with our customers" I