Drivalia conquered the Czech market through the acquisition of the leasing company LeasePlan. “We believe that we will overcome the negative signals from the market with a good offer even against stronger competitors,” says Paolo Manfreddi, CEO of Drivalia, who also acts as head of European markets and business development for CA Auto Bank, owner of Drivalia.
Which of the trends will most affect the future of your car business?
First, we see that operational leasing is constantly on the rise. While in 2020 its share was nineteen percent, this year it is almost a quarter of all car registrations. It has been on the rise for the past fifteen to twenty years. And we believe it will continue to grow. In the past, it was mainly focused on B2B (business to business) mode. We believe that it will also take root in the private sector, where its current share oscillates between ten and fifteen percent.
Another big trend is something we call flexibility. People today are much more interested in being mobile than owning a car. The subscription market is expected to grow to more than 22 billion euros per year by 2025. Even in 2020, it amounted to less than five billion. That’s why we’re betting on a subscription model. This is to satisfy this rapidly increasing demand.
Today, Drivalia operates in thirteen European countries, mainly in the western part. This year it is to expand to Germany and Poland, next year you mention Austria, Sweden and Switzerland. What is the target position in European markets?
In the short term, we want to expand our perimeter in Europe. So that Drivalia expands to all eighteen markets where our owner CA Auto Bank already operates. And in these markets – including the Czech one – to grow quickly. In the Czech Republic, for example, we are already concentrating on long-term rentals, and we expect further growth from offering the aforementioned subscription. Through it, for example, it is possible to change the used car for another without restrictions, for example depending on which car suits you in winter and summer. Last year in the Czech Republic, we reported a turnover of 3.7 billion crowns, a gross profit of 350 million. We operated thirty thousand cars and had 2,500 clients. From next year, we will also be present at Václav Havel Airport, where we mainly target retail clientele.
How much will you invest in the expansion?
It will be tens of millions of euros, mainly going to our software platform. I can add that we control assets worth two billion euros. We aim to double them.
The automotive industry is undergoing the biggest transformation in its rich history, according to many industry leaders. It will switch from fossil fuels to electric power within a few years. I suppose the higher purchase prices of electric cars and usually lower operating costs throw off many an established business model, don’t they?
Customers still have doubts about electric cars. Personal experience is important. So we offer it. You choose a subscription, you choose an electric car. After that, you either keep it, or simply switch to a car that you like, whether it’s an internal combustion engine or a hybrid. We offer all. In any case, on a general level, it is true that the transition from internal combustion cars to electric ones forces us to adapt our offer to clients more quickly.
The purchase prices of new cars are rising, they are becoming less affordable for many people, and I reckon this affects your business as well. How are you going to deal with it?
Let’s take fully electric cars. Their purchase prices are typically higher than those of internal combustion vehicles, on the other hand, their maintenance and operation are cheaper. In addition, new battery technologies are coming to the market. Yes, higher car prices affect everyone, we are no exception.
The American Tesla is conquering the European markets, the Chinese “electric cars” expanding into Europe and the Vietnamese VinFast are also ambitious. Will we see a wider transformation of the brands that dominate corporate fleets?
We take it as an opportunity. These manufacturers are launching a lot of interesting electric cars, but they don’t have extensive dealer networks. This is our chance. Through our subscriptions or car rentals, these car companies can become visible. Once you enter the market with one or two thousand cars, people will notice. So a customer who is curious about how new electric cars drive, but is afraid, doesn’t want to invest in them or can’t afford it, can reach for a subscription. We aim to have half of the cars electrified by 2026 – i.e. fully electric or plug-in hybrid. By the end of the decade, it should be eighty percent. But I am sure that by that time we will already be 100% in electric cars.
What do you expect from traditional European car companies, will they recover?
It depends on when you mean.
Let’s say until 2026, which is a reference year for Drivalia.
Even if Tesla’s Model 2 could be on the market by then, which could be a game-changer for everyone, I don’t expect non-European car brands to make up more than twenty percent of our fleet. The representation of cars from the Volkswagen concern (which includes brands such as Škoda Auto, Seat, Cupra, Audi or Porsche) or Stellantis (Fiat, Alfa Romeo, Citroën, Peugeot or Opel) is still high here.
As a leasing company, you certainly have a good overview of the current willingness of companies to spend on cars. What is the state of European businesses now?
For the last four years, unfortunately, we have been facing crises slowly every six months. Rising interest rates and more expensive financing are of course affecting the entire continent. But I believe that we will all fight it successfully.
Are these crises affecting your economy as well?
Honestly no. We plan to grow, we will continue to invest and expand. We believe that we will overcome the negative signals from the market with a good offer even against stronger competitors.
I recently came across a map of Europe that illustrated how each country is prepared for the coming era of electric cars in terms of the number of charging stations. It emerged from it that Germany and probably a few Nordic states or Benelux may be able to absorb the demand for recharging. There are large differences in the preparedness of countries across Europe, the east of the continent, including the Czech Republic, is not well prepared. Do you understand this as a risk for your business as well?
We do not plan to completely switch to electric cars in two or three years. The goal I mentioned – to have half of the cars electric or plug-in hybrid in 2026 – is general for Europe. In countries such as the Czech Republic, we will probably be below this value even in 2026. After all, if we look at the current sales of electrified cars, we can deduce a lot. For example, in Italy, where we have our headquarters, we operate more than 1,600 public charging stations. It is the largest network operated by a private entity in all of Italy.
What are you doing to increase interest in fully electric cars?
We invest in customer comfort. Let me give you an example: you subscribe to our electric car. With it, we will give you our own “credit card”. You don’t have to register anywhere, simply come to the station and charge the car. Frankly, it’s much more about convincing customers than our own employees. They are already well trained in how to explain to people that charging is really simple. However, we still encounter the fear of customers, especially when they rent a car while they are away from their home country.
Paolo Manfreddi (47)
He has been leading Dravilia as CEO since October last year. At the same time, he works as CA Auto Bank’s director for European markets and business development. He previously worked as CEO of the leasing company Leasys Rent and Leasys New Mobility Rent. He started his career in 2002 as a car salesman, then moved to the Fiat group.
2023-10-29 04:30:00
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