Motorlease’s Perkins Talks Reorg, Client Strategies & Market Dynamics

Jeffrey Perkins was named the new Motorlease President on October 31, 2022.

Photo: Perkins

There’s nothing like a pandemic, car shortages and growth spurts to test your internal processes and restructure your business.

Ask Motorlease’s Jeff Perkins: “We’ve seen a lot of growth in the last 12 months,” said Perkins, who was recently named president of the Farmington, Conn.-based fleet management company. “But it’s a result of everything we put in over the previous 12 months.”

With 20 years at Motorlease, Perkins comes from the operations side where he oversaw purchasing and remarketing. As Perkins transitioned into the role, he oversaw the restructuring of the company’s operations and business development teams — all while growing the company’s vehicle portfolio, client base and employee count.

While the company’s business structure has been restructured, the executive management team has long-term tenure. Beth Kandrysawtz will continue as CEO of Motorlease, which her family has owned for 75 years. From his home in Florida, Candriswatz is still heavily involved in the company and communicates regularly with the management team, Perkins said.

Executive leadership also includes Joe Pelehach, VP of business development, Justin Messick, controller and Brad Lutz, VP of technology and customer experience.

Restructuring opportunities

Motorlease’s operations division has been expanded and split into two divisions: service, which includes remarketing, maintenance and insurance; and vehicle acquisition, which covers purchase, registration, delivery, and logistics.

The business development team has also been restructured. Prior to the restructuring, Motorlease’s account executives would prospect their own accounts and maintain those relationships through contract closure. Now, “we’ve divided up some of those responsibilities to make (the process) more efficient,” Perkins said. “We’ve created more of a manufacturer’s assembly line approach.”

The new structure recognizes individual strengths: “We have people who are good at prospecting, and we have people who are good at maintaining those relationships. And we’re really close now.”

The Business Development Team is responsible for prospecting and onboarding new clients. A newly created sales development rep position feeds the company’s leasing consultants, who in turn feed the reps responsible for closing the sale. Those clients are then transferred to the Customer Experience team, which is tasked with maintaining the relationship.

“We’ve had a tremendous amount of success with (this new process) and took that opportunity to really make it beautiful during Covid,” Perkins said.

Getting creative for SMBs

With clients in every state and Canada, Motorlease’s sweet spot – and has been for 75 years – is the SMB market with fleets of 15 to several hundred units. “Right now, a lot of our competitors are moving away from that segment,” says Perkins, largely because of the strictness of manufacturers’ fleet allocations.

These fleets are replacing a few vehicles annually, but not enough to be allocated by manufacturers, making it more difficult for them to order vehicles going forward. “You have to be creative with options for them, whether it’s buying from (the dealer’s) stock or maybe having another manufacturer with a vehicle that fits their needs,” he says.

It also includes creative spacing. For example, if a truck order is delayed, will an SUV with flat folding and an installed slide-out bed or drawers work? Perkins said MotorLease has a 100- to 150-unit service fleet of small SUVs that carry toolboxes and other supplies.

Passenger vans and minivans are still hard to come by, leaving fleet folks with fewer options to get creative. The seven-seat SUV is a limited option. “Some nonprofits and fleets using people movers are really struggling right now,” Perkins said.

For larger fleet management companies configured to manage large fleets through digital dashboards and enterprise integration, for Motorlease’s clients, “we’re here to hold their hands,” Perkins said.

Motorlease writes 80% closed-end leases and 20% open-end finance leases. Perkins acknowledged that the competition’s move to open-end leases gives Motorlease latitude to serve clients who would prefer closed-end leases. The typical average motorlease lease term is 36 to 38 months and 60,000 to 70,000 miles.

“We’re for fleets that don’t want to be in the car business; They want an outsourced partner,” he said. “Their drivers tend to be highly compensated individuals, whether they’re top salespeople or executives or service people who earn money to keep their businesses on the road.”

“When a new car arrives, they give us the keys to the old car and can do whatever they need to do.”

The biggest challenge is vehicle availability and the new normal of early order cut offs and rapid model sellouts, sometimes within 24 hours.

Perkins says this high-cost, tight supply environment is pushing some clients away from compensation, as drivers have a hard time affording a private car and would prefer a company-provided one. “They move into a lease with a fleet management company that has some purchasing power,” he says.

Vehicle Disposal and Remarketing

In terms of vehicle disposal, Motorlease has dabbled in retail shipments over the past few years. But with strong wholesale prices today, the company has pulled back from retail.

Motorlease has taken advantage of the growth of simulcast auctions, where cars are driven in the lane while buyers can also bid online, expanding the nationwide buyer network.

Before the pandemic, Motorlease sold about 75% wholesale through auction lanes and 10% through retail remarketing channels. About 15% were sold directly to drivers or to grounding dealerships for lease.

With vehicle availability now drastically reduced, this percentage has shifted to sales to drivers and direct sales to dealers hungry to sell used units. “These dealerships are willing to pay a lot because of the availability of the car and they know they don’t have to go to auction,” Perkins said.

Electrification question

Hybrids have grown in Motorlease’s vehicle portfolio over the past eight years. The premium for a gas-only vehicle isn’t excessive for a hybrid, and that value is recouped — and then some — on resale.

Perkins can write a closed-end lease for a hybrid for $30 to $50 a month less than a lease for a gas-only vehicle. “It makes a ton of sense,” he says. “You save money on fuel and lease payments, and that’s the right thing to do.”

Regarding electrifying the entire fleet, some clients are starting the process, such as a small rollout of EVs in a pool fleet at a corporate headquarters. Another client with a fleet of several hundred vehicles made wholesale changes to its selection list. The client now only offers plug-in hybrid (PHEV), hybrid, or fully electric (BEVs) models, with gas-only models no longer available.

But most clients are exactly where they are questioning where to start. It must make sense for them, Perkins says, based on duty cycle and cost structure. “We’re seeing a lot of interested fleets, but they’re not there yet,” he says.

Because EVs are essentially software packages with untested aftermarket values, “I’m concerned about how the long-term residual values ​​can hold up with them,” he says.

Overall, Perkins says MotorLease is poised to meet these changing needs in any fleet management area. “There’s a lot of change coming in how we buy vehicles, how we sell vehicles and how we power them and then how we put equipment inside them,” he says. “It’s all changing. It’s really interesting.”


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