Interview with Eric Van Vliet!
Eric van Vliet, CEO, Hitachi Capital CEE
“We can support our clients virtually without limit.”
Hitachi Capital and Mitsubishi UFJ Lease & Finance recently announced a planned merger between the two companies, creating Japan’s second-largest leasing company. We sat down with President Eric van Vliet of Hitachi Capital Central and Eastern Europe to talk about the implications of the merger for our region .
Let’s start with the latest news concerning Hitachi Capital. Can you tell us a little bit more about the merger between Hitachi and Mitsubishi?
“This is great news, and we have known that it would be taking place since 2016. Hitachi Capital has two main shareholders: one is Hitachi Ltd, which everybody knows from the products, and the other one is Mitsubishi Leasing. We already knew back in 2016 that one day they might merge into this new company. Just like Hitachi, Mitsubishi Leasing also had its own very large and broad leasing company, including airplanes, engines and real estate, and when it took a share in Hitachi Capital the aim was to bring the two groups closer together to become a really large player in Japan. Mitsubishi is not active in Europe, although Hitachi Capital does have a strong presence here, so this broad idea of bringing them together would result in a strong presence all around the world. With the merger of Mitsubishi and Hitachi Capital, we have created a strong global player, the second-largest player in the world after the financial services group Orix. As a result, the whole product portfolio will be much broader, and the availability of capital for leasing more easily accessible, which will give us an incredibly strong position as the second-largest player worldwide.”
What will the impact of the merger be on your operations in Central Europe?
“Here in Europe, we will not make any changes in the organisation that will be directly visible for our clients. However, we will be the second-biggest leasing company in the world, giving us a strong position and access to capital so that we can support our clients virtually without limit. We can offer many services with better conditions and support companies in their growth virtually without limit, too. And that is particularly important for our clients. The impact on our organisation in Japan will be directly visible, however, since the two headquarters there will be merging.”
You mentioned easy access to capital. Does the merger have implications for Hitachi’s future in Central Europe?
“Yes, we already have a growth plan, and we are always looking to grow further. When you look at the beginning of the year, when we took over Fraikin in the Czech Republic, Hungary and Slovakia, giving us a presence in three additional countries, our strategy was to expand in the region. We continue to look for the possibility of acquisitions and our top priority is to look for potential acquisitions in Poland. So we keep on growing on the one hand in an organic and autonomous way, but on the other hand also through acquisitions. And therefore the merger will give us much more strength to take over and build our position here in this region, enabling us to service our clients wherever they have their business.”
For people who may not know your company very well, can you tell us a little about things that have happened in the past? For example, the merger, your activity in the region and what has been established over the past few years?
“Our history goes back to 2016when we started with Planet Car Lease, a pretty small private company. Then we merged with Hitachi Capital and from that point on we have been only expanding. Since that first expansion, we no longer focus only on passenger cars and light commercial vehicles up to 3.5 tonnes, which is what most traditional leasing companies on the market do. We also go beyond 3.5 tonnes up to big trucks of 44 tonnes. Our core business is to customise commercial vehicles, so we service every customer depending on their needs to make sure they receive a different commercial vehicle, with specific sizes, lifts, freezing possibilities, and so on. Our focus is on providing this customisation in terms of cooling, body building, lifts, and all the rest. We built a really strong team for that, and that was the first expansion. This product offer is also a very big advantage for our clients with a full range of vehicles – passengers cars and commercial vehicles – as it means we are a one-stop shop that can help them not only in Poland, but also in CEE and the whole of Europe. So that is a unique position and there is nobody else on the market who can do it.”
Can you tell us a little more about the activities that you have established in other regions over the years?
“Yes, after our first step involving customisation and expanding our wide range of vehicles, the next step was also in the regions. We had a strong position in Poland, but we were not present in other CEE countries. So, our first step was the acquisition of Fraikin earlier this year, which immediately gave us a good position in the commercial vehicles sector in Hungary, Slovakia and the Czech Republic. We are now in the next phase of our strategy in those three countries, which involves adding passenger cars to our offer there. On top of that, in Hungary, we are working on the acquisition of a passenger car leasing company which, if it succeeds, will immediately make us the sixth-biggest player on the Hungarian market. We plan to repeat that in other countries too, so our ongoing expansion strategy will put us in first place in all CEE countries.”
At the end of the year, we always look back at how things have gone. How was the financial year for Hitachi Capital?
“Our financial year is a little different as we have a broken year, starting on 1 April and ending on 30 March, so we will be able to say more in the spring of next year. However, I can already say that we will meet our budget targets and present a very healthy profit.”
You are performing better than planned, but one big thing that happened in 2020 is Covid. What impact has that had on your company?
“Yes, Covid has hit us all, so we cannot say that we have no issues with that as that would not be true. However, the impact in our sector has been less, and what also helps is that we are such a strong player that we are not approaching a situation where we have liquidity issues. And that is something that our competitors, even some big players, have had.”
Many companies put on the brakes and held back on making new investments. Didn’t you have any problems with sales?
“What we are seeing is that there is an impact in the sense that we are growing less quickly than we planned, but business is still ongoing. So we will not achieve our full growth plans. Is that a big issue? Of course, it is never nice not to grow in the way you planned, but it’s not bringing us any financial problems. And don’t forget that companies still need vehicles. They need to replace their fleets so that brings new opportunities to us as well. Many came to us because our competitors couldn’t help them anymore due to their financial standing. In this situation, therefore, we see some sectors losing out, such as restaurants and hotels, but on the other hand, other businesses are increasing, such as home delivery, online ordering, and so on. This means that they need extra vehicles for deliveries. We are very flexible and ready for those opportunities, and we have already bought the stock in the market so that we can immediately deliver vehicles to clients who would normally have had to wait three or four months.”
“It’s true that we have them as well. We try to help these clients and find solutions, such as being flexible so they can return their vehicles early or park them for 3 months at our premises so that they don’t incur costs. We support our clients by helping them to reduce their costs and then, as soon as the economy picks up, we will be able to support them again and get the vehicles back on the road. There were several companies in our region which were also using this solution, especially in the first wave, because the factories were also closed at that time and it was possible to see the whole transport market collapsing. Many strong players managed to survive, but there were also some players who ended up in a difficult situation. We want to be a partner in the good times and also the bad times, and we want to help our customers that are having difficulties.”
Looking at the situation with Covid-19, how do you foresee the mobility business in the coming months?
“We see the trend that our business will continue to increase. Why? Covid-19 has made people scared. People are much more worried about taking public transport now, so they are looking at other forms of transport. And that’s where we come in as we offer mobility solutions. Of course, we have vehicles and that is one thing, but people are also looking at other products and flexible solutions. They are looking at mobility solutions for getting from A to B, without using public transport, so in that sense it also helps our business and gives a positive outlook for the future. It will be difficult to get everybody back into the public transport sector as before.”
When we look at Covid-19, it seems that being eco-friendly has lost a bit of momentum to issues such as profitability and the bottom line. How does this work in your market?
“It depends on the market you are in. In our region, I would say that it’s a little less important, but in Western Europe taking care of your carbon footprint is as important as it was before Covid. So we see mainly two trends: where people are looking for mobility which is not only a car but a combination of a car with a bike, taxi, public transport, and so on. They just want to get from A to B in the best possible way. A few years ago, we bought a company in the Netherlands called Mobility Mix, specifically to be the frontrunner in mobility solutions. Clients get a card which allows them to use all forms of transport, and then on the app you just say that you want to get from point A to point B, and the app tells you the most efficient, quickest or cheapest way to get there. It is also easier for companies from a financial and administrative point of view as the company gets an invoice once a month where everything is already added together, so they don’t have any additional administration to do. It’s all done by us. And this takes away all the administration and troubles for the company.”
Apart from this app, how is e-mobility going here in Poland? What are your sales in this area?
“What we can see is that the switch from cars with combustion engines to hybrid and fully electric cars in Western Europe is progressing quite rapidly because governments are giving hefty grants for buying these cars. In Germany, you can receive up to 8,000 euros, which is a significant amount. By doing so, they make electric cars the same price as a normal car with a combustion engine. As a result, we see that change is happening in Western Europe very rapidly. What is missing in our region, especially in Poland, is government support, which currently offers fewer tax advantages for electric vehicles. And the charging infrastructure in Poland is also very limited. For example, when I want to drive my Tesla and go to Poznań, it is very difficult as there are no charging points on the way. We need the government to support this, because although private investments will set up the charging infrastructure, we still need government support to create the incentives for companies to become interested in this market. And that is still missing. There have already been many projects in the past, but they were never approved, so we’re all waiting for the government to support this. We do have electric vehicles, and we are actually a frontrunner on the Polish market, so we promote them to our clients, but they are hesitant due to the limited infrastructure.”
Do you see already some clients that want to be the first on the market to buy electric cars?
“Yes, we see that there is a strong interest among international companies. Some of them have the strategy to reduce their CO2 footprint by 25%, or even 50%. And in some countries, they even have the policy that all vehicles must be electric. However, we are noticing that even those companies are being realistic, and they won’t invest in a fleet when electric cars are still too expensive and the costs for a fleet will increase tremendously when compared to cars with a combustion engine. The charging infrastructure is also a huge issue because when you put your salespeople in electric vehicles, they will not be so efficient. In order to make decisions about their whole fleet, therefore, these companies need support from the government in terms of the infrastructure and grants for electric vehicles.”
What about your small trucks? Are you already experimenting with them?
“Yes, we are really the frontrunners in the electrification of this segment, and we are in a continuous dialogue with our clients that are using them. We had done a test with the Polish Post with a 12-tonne truck, and with other companies with trucks up to 3,5 tonnes. We also offer small garbage trucks, which is a great concept for electric mobility. They are high polluters, and the distances they cover are not so big, so they are perfect for making electric. The price of the electric version is still higher, but we have solutions for that, and we are trying to convince clients to at least start tests with the electrification of their commercial vehicles.”
And finally, what can you tell us about Covid-19 and how you are handling the situation at your office?
“This is obviously having a big impact on what we do. We have divided the team into two groups and each week one of those groups has home office. At the beginning of each week, before they start work, all our employees are given a Covid test, which is extremely important in order to keep the virus from affecting our operations. When they test negative, they can start their work for the week. And then the week after, team B goes through the same procedure. We have plexiglass everywhere in the office, and also directions for walking, gloves, hand sanitiser machines and open windows. So we have really put all necessary measures in place. It is also a good feeling for our employees that they know all their work colleagues have been tested, and that they are negative. Unfortunately, we have had 3 employees who tested positive, but we detected that before they entered the office area, so they were isolated and put into quarantine before they could infect their colleagues. The idea for this testing came from the Netherlands-Polish Chamber of Commerce, who arranged it during the visit to The Warsaw HUB tower and the UNIT. When I saw that initiative, I thought it was a very good idea. If we hadn’t seen it there, I would probably never have thought it was possible to test everybody so often. When it comes to salaries, we have kept them at the same level as before the Covid outbreak. Many companies have cut salaries and working time, but nothing like that has happened here. We are well aware that our employees have their own obligations with mortgages and families, so we also say we will not reduce salaries. Everybody gets their normal salary, with normal bonuses, just like in a normal situation. That is also a benefit of being part of a strong group. We can afford to do these things, and it shows that we take care of our employees.”
Źródło: Netherlands-Polish Chamber of Commerce