Your car fleet is none of your business, but it is for this Japanese-led firm
For many small entrepreneurs, owning a vehicle is a necessity—for procurement, delivery and on the side, even household errands. But for some large companies in need of hundreds of cars for its executives and staff, buying such a large fleet may not make business sense.
Satoshi Matsuo, president of BPI Century Tokyo Lease & Finance Corp. and BPI Tokyo Century Rental Corp., cites an emerging trend among large enterprises, especially multinational corporations, to veer away from vehicle ownership. They see no need to devote corporate time and manpower to manage a huge fleet.
“They tend to borrow or [enter into] subscription [plans] and then, they can choose. If they buy, they have no option… If it’s for lease, if they want to continue, they can continue. If they want to replace, they can replace and maybe we can include maintenance or insurance,” he says in an interview with the Inquirer.
There is a large potential to offer fleet management solutions in the Philippine market, he says. Companies can opt to rent cars for short-term requirements, or lease an entire fleet for a longer term of three to five years.
By 2025, BPI Century Tokyo group’s goal is to become the No. 1 player in the auto leasing space, where it ranks second to date.
But the leasing and car rental group, a partnership between Japanese lease financing group Tokyo Century and Bank of the Philippine Islands (BPI), isn’t taking away business from car dealers. It buys about 2,000 to 3,000 new vehicles to replenish its fleet every year. Sometimes, the challenge is sourcing the vehicles it needs as many of them have to be imported.
Currently, the group manages a fleet of about 7,500 leased vehicles, which will expand by at least 1,000 with its acquisition of Diamond group, for a total of 8,500-unit leasing portfolio.
Diamond, which was put up by the Buenaflor family in 1980, offers complementary services such as short-term car rental, maintenance and repair factory, business process outsourcing fleet management, and 24-hour service.
In this market, customers typically buy the leased vehicles at the end of the contract. Otherwise, BPI Tokyo Century group can put the vehicles up for rental before selling them. Thus, even after the vehicles have fully depreciated in value in five years, the group can still monetize them.
“At the end of the lease, they can buy at a low resale value. So maybe in the beginning, it’s a P1-million car; then depreciate it, five years later, [for] 30 percent or 40 percent, they can buy it.” This is the kind of fringe benefit offered to employees by multinational companies and big Filipino firms, Matsuo says.
Companies that require at least 300 or 400 cars, such as those to service marketing and sales teams like fast-moving consumer good companies and pharmaceutical firms, are the ones that usually find merit in leasing vehicles, he says.
BPI Century Tokyo’s leasing operations are mostly in Luzon, but if its clients have businesses in Visayas and Mindanao, the leased cars are shipped to wherever the customers are.
“We’re in the process of restructuring the organization, replacing our system, [bringing] more involvement from Tokyo Century in the operation to expand the business,” Matsuo says.
Previously, the company relied on referrals from BPI. It has yet to tap the vast market of Japanese multinational corporations, he notes. The value-added services of Diamond also boost Matsuo’s confidence that market leadership in the auto leasing business will be attainable by 2025.
Tokyo Century at the helm
BPI Tokyo Century group was formed in 2014, with the Japanese firm owning 49 percent and BPI holding 51 percent. In 2020, Tokyo Century Corp. bought 2 percent from BPI and raised its stake to 51 percent.
The shift in majority control is seen to allow the venture to take more advantage of Tokyo Century’s expertise in auto-related businesses, particularly full service operating lease, while still leveraging the BPI network.
According to BPI president Jose Teodoro Limcaoco, the main idea of the venture is to provide corporate clients a full service offering by removing the burden of managing large automotive fleets from them and having BPI Tokyo Century group take care of all the car ownership requirements.
“It’s an efficiency play for [our clients], financially,” he says, because under the leasing scheme, corporations will no longer have to buy a large number of vehicles, borrow money for these acquisitions and then manage the fleets themselves: taking care of maintenance, hiring drivers, paying for repairs, registering the vehicles periodically and managing their insurance policies.
“We were very attracted to Diamond, because they have fleet managers to manage around the 6,000 cars that they have,” Limcaoco says. “That’s not even cars that they own. These are cars owned by corporates who said: please take care of this fleet for us.”
But he explains that BPI Tokyo Century takes this model a step further by completely assuming all the hassles of fleet ownership. Clients that outsource vehicle management have the potential to migrate to full leasing arrangements. “The title is with Century, we own the car, we give it to you, and we manage everything. When it breaks down, we’ll send another one for the corporate client,” Limcaoco says.
Established in 1969 in Japan, Tokyo Century is a highly specialized financial services company focused on equipment leasing, mobility/fleet management and specialty financing. Its subsidiary, Nippon Car Solutions, is very popular among foreign tourists driving themselves to sightseeing spots.
The group has brought many of the Japanese firm’s specialized businesses to overseas markets, although the focus is different in each market.
In the Philippines, given its aspiration to be the operating lease and rental solutions company of choice, BPI Century Tokyo is rallying its people toward “one team, one goal.”
The firm currently has about 100 employees, while Diamond has 100. To reach its goal to be No. 1 in car leasing, Matsuo estimates that total head count would grow to about 250.
This means working as one team toward one goal. Another slogan is to “seek happiness for all.”
By pursuing customer satisfaction, the customer will be happy, but the employees must also be happy to provide the service, he says.
“I am reminding everyone to seek happiness for their family. I want their family to feel proud to have one family member working in this good company.”
“What is the meaning of the good company? Surely not only salary amount they receive, not no-overtime. The company is contributing to people’s lives, is valuable for the society and the company’s activities contribute to the surroundings.”