There was intense merger and acquisition activity in the fleet and salary-packaging industry at the turn of the century, but after the global financial crisis things went quiet.
Now, with stable markets and access to funds, some of the big players are pursuing consolidation by looking to pick up smaller competitors.
One of the big deals almost a decade ago was when the CBA fleet leasing business known as Fleet Australia was sold to a new entrant called SG Fleet from South Africa. It has acquired several more businesses and is listed on the ASX.
Campbell Jones, CEO of inventory solutions at Cox Automotive Australia, has seen a number of ownership changes during this time and thinks this year will bring more consolidation.
"This will be an interesting area to watch in 2017 from both a fleet leasing and a dealer perspective, " says Jones. "We see no major new entrants into either marketplace and only see the big getting bigger and growing their individual portfolios.
"The interesting dynamic certainly in the franchised dealer area will be the size, scale and strength of some of the major dealers in some of their discussions with the OEMs (original equipment manufacturers)."
Simon Johnson, principal of corporate finance at Pitcher Partners, has been working with several clients to grow through acquisition.
"What we are seeing in the last three years is larger groups looking for bolt-on acquisitions," says Johnson.
"Some of these larger businesses are not growing potentially as much as they have in the past organically and, while capital is cheap to get, growth by acquisition is a good strategy."
Scale is another reason for existing players to look at acquisitions and Guy Steel, chief financial officer at WEX Australia, believes cost pressures will bring more consolidation activity.
"Consolidation will continue as organisations address earnings pressure through operational efficiency. We also see limited growth in vehicles under lease so the focus is on taking share through pricing and scale benefits," says Steel.
Though with scale can come a cookie-cutter approach to service and products. So consolidation comes with a warning that customers may get upset with the perceived lack of service and personal attention.
Matthew Prestney, executive director at TR Fleet, says: "It is not uncommon to hear a level of disquiet in the market from customers. As a result, a number of bespoke and 'boutique' fleet and driver management organisations have begun to flourish in these conditions due to a combination of the nature of their services and their dedicated focus on the changing needs of the customer."
"We therefore expect to see an increasing interest from the 'traditional' leasing companies in understanding the reasons behind the continued success of these more-nimble new market entrants – and this, in turn, may ultimately result in a number of acquisitions as a result."
