Mergers Wheels-Donlen, ALD-LeasePlan: What’s next?

Last week, two major stories set the fleet and mobility industry abuzz. On Wednesday, LeasePlan and ALD Automotive confirmed they are discussing a merger. On Thursday, Donlen and Wheels Inc. announced they had in fact just merged. Each story could have far-reaching implications, and put together, they may point to a larger trend. So, what to make of them? Here are our thoughts and questions, and last but not least, some first reactions from fleet customers.

To better indentify and understand the impact of the two events, we also refer to our biographies of the 4 companies: ALD Automotive, LeasePlan, Donlen, Wheels Inc. And we have pictured the current presence of the 4 companies and their alliance on a world map: ALD Automotive, LeasePlan, Donlen, Wheels Inc. 

1. Our thoughts

Two differences, one common motivator

On the face of it, both stories point to an accelerated consolidation in the fleet and mobility industry, and more particularly in the vehicle leasing and fleet management sector. But there are some important differences.

Firstly, there is geography. Although there is some overlap, these stories are mostly relevant in different regions. LeasePlan and ALD are global players, but with a European focus. Donlen and Wheels Inc are important players in North America.

Secondly, there is a difference in finality. The Donlen-Wheels merger is done and dusted. It’s a fact. ALD and LeasePlan, however, are still in talks – and the outcome of those talks could still take various shapes. A straight merger is an option, but it’s not the only one (but more of that later).

Having said that, we do see a common motivator behind these two stories. And it is that leasing and fleet management companies, especially in the industry’s two most important and mature regions, have a strong need and a clear interest in seeking economies of scale.

We are in a transformation towards sustainable mobility – a process that is urgent, vital and costly. If mobility providers want to continue delivering quality services and products in the global mobility arena, they must achieve economies of scale – both operationally and financially.

Donlen-Wheels: interesting, promising, logical

Now let’s take a look at the Donlen-Wheels merger. Considering the configuration of the North American fleet market, this is a move that’s interesting, promising, and even logical.

In March 2021, Hertz sold Donlen to Athene Holding, a financial and retirement services company. Donlen is a fleet management company with approximately 304,000 vehicles in portfolio. That’s a reasonable size, but still well behind Element Fleet Management for example To compete in that market, which is highly competitive and dominated by open-end lease, you need size and scale.

And that’s what Athene Holding has achieved: combining Donlen with Wheels Inc results in a fleet size of about 550,000 vehicles. This will increase leverage and facilitate investment, notably regarding sustainability and fleet electrification, topics that surely will only become more prominent in 2022, also in vehicle fleets in the U.S.

What’s even more interesting: both fleet management companies are customer-driven and have complementary customer portfolios. Donlen has over 50 years’ experience with truck, pickup and LCV fleets, with an increasing focus on telematics. Wheels Inc has experience with car-focused, sales-driven fleets of pharmaceutical companies and the like, and is known for the quality of its service.

So, this marriage benefits both fleet management companies, but also holding company Athene, and the fleet customer – on the condition that the merger manages to maintain the distinct culture of each company, and keeping in mind that there is a clear difference of mentality between Athene Holding, which is publicly listed; and Wheels Inc, which has always been a privately-owned company.

Shlomo Crandus, the CFO of Wheels Inc, has been appointed the new CEO of the Donlen-Wheels combination, so the Wheels culture at least seems to be secure for now. 

ALD-LeasePlan: the big beast, with a big if... View more here