linkedin_signin   login  register
linkedin_signin linkedin_signin linkedin_signin    
Home > News & Content > More news

Intermark Auto: From operations solutions to fleet management services

Started in 2002, the first company in the group of Intermark Auto Russia (IAL) was initially built on software and operations solutions for multinationals; furnishing incoming companies with costing and reporting tools specifically made for Russia. After two years, clients started asking for fleet management services and IAL changed its trajectory. We talked to its Managing Director Craig Curphey.

Can you give us a little more background on the company's journey from software to service?

Craig Curphey: We were providing software solutions for large multinationals with big fleets. This was the first stage of our development. Our biggest opportunity came in 2004. Often, foreign oil companies prohibit employees from driving and in 2004, BP – which had a large Russian operation – made a tender to provide transport and drivers for employees and expats.

So you never set out to be a leasing company?

C. Curphey: At that time operational leasing barely existed. But we saw the opportunity and decided to go for it as there was no one else who could provide the service. We made a new company and bought 200 Chevrolet Tahoes and recruited and trained 400 drivers to drive BP executives. To train the drivers we had to store the first cars on a disused airfield with an armed guard for several weeks, as we did not even have a garage until the day before we began live operations. It was an exclusive contract for those two years. In 2006 we merged leasing and fleet management and started providing services to other clients in the pharmaceutical, financial services and oil and gas sectors.

How wedded are Russians to their cars?

C. Curphey: Even foreign companies in 2006 were buying and keeping as much business as they could in-house. In Russia there's a culture of doing things in-house. Before 1990, there was a culture of decent sized organisations having their own kindergartens and schools in-house. There are some towns that are basically one-company towns which provide everything including hospitals. It's a culture that's here and it's taking a while to break that down and introduce the concept of outsourcing. The concept of leasing a car without an option to own it is new.

Is there much progress in the popularity of outsourcing?

C. Curphey: Compared to 2005/6 the number of foreign companies using outsourcing has increased dramatically. Even  three or four years ago we had to explain to companies what outsourcing was – we had to get over that barrier before explaining how it would work for them specifically. The same I remember was the case in DHL in the mid-1990s. We had to explain how it works, and what benefit express delivery could be, and by late 1990s the market was already aware. Now everyone knows what operational leasing is so our conversation with a prospective client is about how we can help, rather than what is operational leasing. So sales has become easier.

Which sectors are most susceptible to outsourcing?

C. Curphey: Sectors like SMEs don't yet understand or want to outsource. Like what has been happening in Turkey, they will come round, but it'll take four or five years.

It's an evolution that's similar to what happened in the West, large fleets come on-board first so we're servicing the pharmaceutical industry, oil and gas, and financial services.

When it comes to FS, Russian banks are going through a big reorganisation and reconstruction effort at the moment – there's a lot of pressure on them from the authorities and market to consolidate and it's much more competitive than it used to be. Banks are having to look at real costs – they're centralising their back offices and getting to grips with their admin and non-core costs too, so they're looking aggressively at outsourcing.

Can you describe the geographical spread of IAL?

C. Curphey: There's been a rapid expansion of cars going to regions. Five or six years ago, 75% of cars would go to Moscow and St. Petersburg and 25% to the regions. Now 60% of cars go to the regions and 40% to Moscow and St. Petersburg.

When we deal with car users in Moscow and St. Petersburg they have expectations as to what service they'll get. In the regions they're used to dealing with everything themselves – we are still telling them: “No, we can do it for you!”

Why the boom in the regions?

C. Curphey: There's just been faster fleet growth here, partially due to economic development, and partly due to the fact that companies now are rolling out the same conditions that Moscow employees get in the regions. For IAL, we have a structure of service in the regions . Some clients choose to work with us solely because we're strong in the regions – even if they have another partner in Moscow.

We have people based in critical cities who look after that region. We have about 800 suppliers across the country in all the cities you've never heard of!

Can you describe the overall leasing landscape?

C. Curphey: Financial leasing is a rough and tumble industry versus operational leasing and it's maturing faster. Financial leasing has more players and basically it takes advantage of the Russian mentality of acquiring the asset – so it has easily found its place in the market.

Just 1% of corporate fleet acquisitions is operational leasing – so it's a minuscule market and there has to be potential. We think it'll become 5 or 6 % in next five years – we really don't expect massive SME penetration so business will come from larger foreign and Russian companies in segments already agreeable to operational leasing.

What other industry trends do you think we'll see?

C. Curphey: Still with financial leasing, it's a game state banks starting aggressively getting into three or four years ago and they adapted well. But now they're interested in operational leasing – Sberbank and VTB Leasing are doing it as are others – and are finding it difficult. With all the different service components and new risk they have underestimated it, so I think what will happen is that banks will start buying operational leasing specialists.

What are the objectives of IAL in Russia?

C. Curphey: IAL’s key USP is level of service. This is what we started from in 2004, and our service levels have allowed us to compete in Russia against strong global competitors. Our goal is provide a world class level of service and safety, which allows us to compete and grow with the market.

What are the big trends in fleet management?

C. Curphey: Fleet Management is a fast growing sector. Growth will continue at an even faster rate as more Russian companies take up fleet management. There is already evidence that Russian companies are turning to outsourcing, even government structures.

In terms of recent trends as a result of current environment, risk management will become even more important, as volatility in residual values, exchange rates and interest rates have begun to increase and will remain volatile for some time. These will all impact on total cost of ownership.


12/09/2014  |  Ally Millar


Registration required to post a comment Registration required to post a comment

More blogs


In this section, you will read interviews with fleet management suppliers, leasing companies, OEMs and third party providers.

More Interviews

Analysis Analysis

Autorola is helping the fight against corruption in Brazil | 

Members Area Members Area

Privacy statement | General conditions of sale | © 2016 Nexus Communication SA