Jonathan Minter speaks with Alexandre Sorel, chief executive officer of Opel Vauxhall Finance, about how the newly revitalised business aims to support its new owner’s growth and profitability plans
Towards the end of 2017, the new Opel Vauxhall Finance leadership team was given 100 days to come up with a strategic plan to guide the company following its acquisition by Banque PSA Finance and BNP Paribas.
This plan was launched in February, and spoke of launching into new markets, and providing new training, mobility and B2B services. Motor Finance caught up with Alexandre Sorel, chief executive of the lender, to discuss this plan, and how he sees the company evolving.
Motor Finance (MF): How did the past 100 days go?
Alexandre Sorel (AS): It was a short period of time for us to finalise the closing of the operation, take ownership of the new functions, and at the same time draw up the new strategic plan. So it was intense for all the teams. But it was properly delivered on time.
MF: You mention in your Strategic Plan that you are launching in Spain. What time frames are you looking at, and what do you intend to launch with?
AS: Today we operate in 11 countries. Spain will be our first extension. We plan for some quite aggressive timings and intend to start operations there in April this year.
To be so quick getting into the market, we will leverage existing tools from BNP Paribas who are our shareholders along with Banque PSA Finance. In Spain they already have all the IT we require and the products we need to enter into the market.
In this very short period of time, we have already started to design and implement the proper sales force to be able to fully cover the Spanish market. This was presented to the Spanish board of Opel dealers in Spain, and we received very positive feedback from them.
Why did you decide on Spain as the first country to expand to?
AS: Spain is one of fastest-growing automotive markets in Europe with more than 1.2m new car registrations in 2017. It was the main market where Opel Vauxhall Finance was not operating, so it made sense for us to enter here.
MF: Do you have a plan for other countries at this time?
AS: We want a consistent approach across Europe in terms of service and finance. We are looking at other countries, taking into account the size of the business and where it makes sense to be efficient and competitive.
One other country quite obvious for us to try and cover quickly is Portugal. For the others, we are analysing the solution.
MF: Will Portugal be using BNP Paribas’s infrastructure as well?
AS: Very likely, yes.
MF: In your Strategic Plan, you mention using mobility packages combining leasing, insurance and service products. Could you expand on what those are in more detail?
AS: This is mainly about properly marketing the offers we already have in the portfolio. Today the approach has mainly been driven by selling a car, then eventually finance, and on top of that insurance and services.
We believe the approach in terms of marketing should start with mobility needs, the budget allowance of the customer and have an upselling service methodology, instead of trying to upsell some services and insurance offers at a later stage.
So this is a lot about properly packing the products, and having the proper sales methodology, which includes a common training program for the leaders at the point of sale. This will be common with the brand, and fully integrated with the finance and services offer.
It’s mainly about the way we design, market and propose the product to the customer.
MF: When you say ‘training leaders’, are you talking about the dealers or on the finance side?
AS: I’m mainly talking about the salesmen at the dealership, because they remain the main point of contact of our customers.
Of course, a large portion of customers are starting their journey on the internet, but sealing the deal is done at the dealers.
MF: On the B2B side, you mention launching a leasing section in Germany, and other markets will benefit from competitive solutions. Could you expand on the solutions?
AS: This is an important segment of the market that we are not covering at the moment. It was done in the past by GM Financial, but in 2009, GM Financial withdrew from all B2B segments.
This is an important one we are recovering today with full service for dealers; we will launch later this year. This is also a channel Opel and Vauxhall are intending to grow in the future. It is critical for us to be there to sustain the brand. It is an area of business where we should be.
In terms of solutions, we can have different kinds of solution and levels of service depending on whether it is an SME or a large fleet. The offers will vary from one market to another, depending on the need.
MF: Has Opel Vauxhall had much presence in the B2B space since 2009?
AS: It had an agreement with another company to cover this segment of the market with offers. This was a white-label solution we are now going to substitute with proper Opel Vauxhall Finance offers.
This kind of white labelling was not as effective as the one we intend to have internally, in terms of commercial performance and support for the brand.
MF: Any specific UK plans?
AS: We have an opportunity in the B2B segment which will cover some of the private market with the launch of a contract hire solution.
Today we only do HP and PCP, but this has been an important part of the market for some years now. In April we plan to launch a new offer of contract hire, mainly for SMEs, but we know some individuals are also attracted to the product. This is the main chunk of the market that we are missing today in terms of offers.
MF: You mentioned in Spain utilising BNP Paribas’s expertise to help with the launch, and using BNP for funding. How closely are you going to work with PSA?
AS: First of all, we are leveraging on BNP Paribas for the cost of funds. When it comes to Spain, this is a way we are going to service and execute the back office quickly. In front of the customer we will always be acting as Opel Vauxhall Finance, and we intend to have a consistent approach in that respect.
Banque PSA Finance is also a shareholder, but we will fully separate the operations at country level from what is related to Peugeot, Citroen and DS, which are be done through PSA Finance subsidiaries in each country in partnership with Santander. This will be fully separate from Opel Vauxhall, which is in partnership with BNP Paribas.
Of course with two different banking shareholders, there will be no joint operations at country level between Peugeot Citroen DS and Opel Vauxhall.
MF: Could that get a bit complicated?
AS: It’s not complicated for us. Both worlds – Peugeot Citroen DS and Opel Vauxhall – were already operating in each of those countries. We are reusing systems and teams that were already there in each case.
Of course, one could say we could have more synergies if it was only one, but we really value the fact that the brands are distinct, so they need to have their proper organisation, marketing and customer service.
Looking at it, we do not see a lot of value entering into a pure synergy kind of project. This is not what we intend to do.
MF: What are you planning with staff?
AS: In terms of the full organisation in the plan, of course, we have worked on the efficiency of the organisation as we intend to grow the business.
We have some levers on productivity and some digital tools for customer service that will enable us to maintain an equivalent level of operational expense, without any major change in the future.
MF: Looking a year ahead, how different do you think the organisation will look compared to how it did before the acquisition?
AS: One of the main changes that is going to work, both on the brand side and on the finance side, is that we will be moving from a quite wholesale-driven business model, trying to push the metal to the dealers and customers, to a more retail-orientated model, protecting the pricing power and the value.
In this area, finance is key to promote cars around a monthly basis, instead of entering a price war with cash discounts.
This move is obvious for Opel and Vauxhall, and on the finance side, we support this. This is a change for the finance company: we will be looking at the retail operations of financing the end customers as a final goal, and financing the dealer is a means to achieve this, rather than the other way around. This is a change to what was done previously.
MF: Do you have any plans to develop more digital tools?
AS: We have already rolled out quite an efficient customer service tool for customers who are currently with Opel Vauxhall Finance.
When it comes to the front office and the sales part, there are some basic things we are going to do. We are going to be fully integrated with the brands on their own websites and make sure any advertised offers on joint campaigns are available on the front page of the OEM site.
This isn’t the case today in all countries. We know almost all customers look around the internet to find offers, so we need to make sure we are there.
We also know a lot of customers will continue and finalise the journey at the dealership. The most important is to be omni-channel, and not necessarily to fully digitise the sale of finance online.
MF: What do you think will be your biggest challenges?
AS: What is challenging is to face external factors. What we can control is not a challenge for us; it’s what we have to do.
If we need to face some adverse winds on the car market, we will have to adapt. But I don’t see an unfeasible challenge in our plan. I have full confidence in our most valuable asset – the people that are in the organisation.