Merchants Fleet CEO Matt Dyer on the Massive Fleet Management Industry

0:00Hi, everyone. On the Builders podcast, I interview CEOs, entrepreneurs, and leaders about building their businesses and career. And today's episode is very interesting and really fun. It's a discussion with Matt Dyer. He is the CEO of Merchants Fleet, which is one of the most innovative companies in fleet management. And you may not know this, the fleet management industry is massively important to the US and world economy, handles millions and tens of millions of vehicles each day. Matt talks about that, also discusses innovation, expansion, sales, dealing with economic uncertainty, lots of things that apply to every business.

0:36Also, you'll hear how Matt started as an account manager at a multinational corporation and ended up as CEO. Really cool and fun discussion. Thanks.

0:51Hi, Matt. How are you? Good to see you. Good to see you, John. Thanks for inviting me on the show. Hello. I'm thrilled you're here. Today, we're going to be talking about an industry that we've not talked about on the podcast before, it's fleet management. And it's a broad industry. It supports organizations that utilize vehicles for business operations. At least that's my understanding of it. And in doing some prep for this interview, I was reminded about how large this industry is and how it impacts my daily life as a consumer. Maybe could you give the audience an overview of how how big fleet management is, and then talk about your company, Merchants Fleet, where you are the CEO.

1:34Absolutely. Thank you, John. Yes, welcome to a step into the world of fleet management. As you say, it's probably a bit of an undiscovered gem, maybe, but it is a big part of the US economy of any economy. I've worked in the fleet space in Europe, as well as in the US. But just to try and put the U.S. into context, you know, in the U.S. is probably about 218 million vehicles on roads. And I would say between nine to 12 million of those we would consider them fleet. And that's made up of, you know, three big constituents. One is, you know, the business space, the corporate space, the area that we particularly play in.

2:18And I can share a bit more about that. But of course, you've got the government sector and local state authorities are very big users of fleet vehicles. But also the rental space would be considered fleet. You know, the daily rental businesses that you that, you know, you know, from the high street. So all in all, it's a sizable and significant part of the of not just the vehicles on the road, but the economy. You know, I look at a lot of things that we do as merchants and effectively we sort of we keep business America moving in some ways. If I go into the business space, I would say there's about six to six and a half million vehicles that are focused from a fleet perspective from corporate businesses.

3:04And that can be, you know, truly small businesses right up to the big mega fleets. You know, you've got some very big players out there, U.S. Postal Service, Amazon, you know, some of the big communications and cable businesses, they run big fleets. And so overall, it's a very significant size. And we're particularly big because we are obviously putting a lot of new vehicles on the road every year. You know, the average age of the of the of the average vehicle in the U.S. is actually quite old. It's probably about 13 or 14 years old. If you look at the average age of our fleet, it's probably going to be two to three years old.

3:44And that does mean we're quite a significant part of new vehicle purchases. About 20 percent of all new vehicle purchases in a year will be going into the fleet space. So, yeah, lots going on. But it's also just a good to put it into context. You know, who are our customers? You know, I've talked about some of those mega fleets that are out there. But, you know, think about the HVAC industry, you know, people who are going to do site visits, engineer visits, the pest control sector, you know, some of the retail sector, you know, even if they're not fully into the last mile sector, you still have vehicles at stores that can do deliveries.

4:25is the energy sector. You know, oil and gas is a very heavy user of vehicles. And say communications as well. So, you know, the size is pretty significant. But then I also have to sort of try and put into context the types of vehicles. You put in managing fleets that have sedans, but a lot of light duty trucks and increasingly medium and heavy duty trucks as well, right up to class eight truck and trailer, which would be considered part of this sector, even though those much heavier assets tend to stay on the road a lot longer. But it's then not just the breadth of the assets, it's the breadth of the services.

5:06And I've been in this industry for a long time, 30 years now. And when I started in this sector, it was very much seen as being a leasing business, not retail leasing, commercial leasing, but it's really grown a lot. And, you know, as you've added in much more of the core fleet services, so not just the leasing of the vehicle, but the buying of the vehicle, the maintaining of the vehicle, the fueling of the vehicle, the repair of the vehicle, the resale of the vehicle. But then, you know, getting more and more towards some of the outsourcing solutions that are there. How are we helping manage drivers?

5:44How are we using technology tools along the way. And even I would say now, we're almost a payments consolidation business, because, you know, we manage all of those different things for our customers, package it all up into one bill, so that they get the efficiency of being able to work, you know, with all of that breadth of services underneath it. So, you know, lots, lots going on in the sector. Your second point of your question is around what about us as merchants? So merchants, merchants, fleet, merchants auto, we actually stand in a number of different camps in the fleet space. You know, we definitely play very strongly in what we would call the long term space, you know, corporates that are using vehicles and tend to keep them for four, five, six years, you know, with leasing, sometimes with leasing and services, sometimes just with services.

6:38and we're very much focused on corporate businesses and some of those industries that you'd know. But we also relatively uniquely also have what we would call a short-term sector, but it's actually more long-term rental. And that's a really important part of the corporate space. You definitely see corporate organizations who want to commit to have vehicles for long periods of time, but may well have some shorter term needs or some project needs where they say, actually, I think I'm probably going to need this for six to nine months. What can you help me with there? And that feels, as I say, a little bit more like a long term rental solution.

7:21It's really interesting. And I want to I want to key on one of the words you you use, which was efficiency, because, Because I can think about margins in some categories are just so, so thin. I can think about probably the part of my career that was closest to the world of fleet management was when I was at Amazon. And the group that I was with focused on grocery delivery. And this is about 10 years ago when grocery delivery was really, really taking off. And like the profitability of the business depended on the delivery being cheap, maybe the wrong word, but the delivery cost being lower than the groceries, which are relatively thin to begin with.

8:13So I'm hoping that you could tell the audience, like, put into perspective how much an industry or business can save by being smart about this in terms of, you know, basis points, cost reduction, etc. That's a good call out, John. I mean, you know, you're right. I mean, look at look at what Amazon has tried to do over the recent years to really get an advantage in the efficiency of home delivery. I mean, it's been a big part of their strategy. It's difficult to just give you one number, but let me give you a little things set. You know, we talk a lot in our industry about total cost of ownership.

8:46And I'm particularly thinking about the longer term side here. And so we really feel it's an important part of our responsibility to advise our customers on the total cost of ownership. And that means we we help them understand, you know, not just what it takes to buy the vehicle, but what they could sell it for. And therefore, what the depreciation costs would be, you know, the interest costs that would take to manage that. But then what's the running cost? What's the maintenance cost? What's the fueling cost going to be? And actually go to work to help them make the right choices. And some of that can be picking the right, you know, hold time for a vehicle, the replacement cycles, knowing that as vehicles get older and have more mileage on them, maintenance costs and fuel costs do tend to go up.

9:34but also helping them understand which vehicles they should be using. We definitely see opportunities for customers to sometimes downscale vehicles because they don't actually need the capacity that they have. And that then gets us onto the great topic of utilization. As you say, you call that out with the time at Amazon. Making sure you're getting the best possible utilization out of your fleet is a really important step forward. And actually, we've just launched in the last year, a year and a half, a product called Fleet Share, which is all about maximizing utilization for fleets as well. But there's another big cost item, which is actually productivity of the vehicle.

10:18You know, the vehicle does have time off road. And, you know, how much you can do, minimize that actually gives the customer more productive time with the vehicle. My estimate, you know, is probably going to cost a business at least fifteen hundred dollars, probably even a lot more if it's a complex vehicle to have it off road, being repaired, being serviced, being, you know, having had an accident. So imagine if we can in a thousand vehicle flea, have one more extra day on road for each of those vehicles. It's a very significant amount of money. but also in just advising in the right area can make a big difference so just one example last year we had a customer that was thinking of holding just 65 vehicles on the road for one more year and through our consulting team and our strategic client team we did some analysis and identified that actually that was going to cost them eight hundred thousand dollars of extra costs So we were able to make a recommendation so they did not have to, you know, incur that cost.

11:28And they went for a fresher approach to putting new vehicles on the road. So there's a lot in here. This is very significant. And, you know, whether you've got a fleet of 250 vehicles or a thousand vehicles or 3000 vehicles, you know, there's a lot of there's a lot to be gained in really getting into the total cost of ownership of the fleet. connection. It's really interesting talking about utilization, how much time the vehicle's on the road, not on the road. I can think about a space that I've been involved with over the last decade, which is the call center, the sales center. And it's really important if an agent is sitting at a desk that they're talking to a customer as many minutes a day as possible.

12:15And then there's a fixed cost with the phone line. And so, you know, if you if you can take calls 24 hours a day and you're reusing that phone line, you know, throughout, you know, throughout the day, that's, that's really important. That's a good call out, John. I mean, you know, for a long time, fleet was seen as being a cost and it is a cost. But as you say, I mean, whether it's more call center or call agent time, or having the vehicle on the road one more day, if that gives you the chance to do 10 more site visits, 25 more deliveries, you know, this is top line growth you can get as well as, you know, incurring some of the bottom line costs that goes with it.

12:57Where are you focused now in terms of innovation? You know, I asked kind of in the context of you saying you have like a new fleet or a lot of new vehicles. You know, I wonder if that's because fuel efficiency or electric vehicles. You know, I wonder, I wonder if there's some other thing. But when you think about innovation in the space or maybe where you're focused on with merchants, how are you thinking about innovation? What do you get most excited about? Yeah, I mean, I think it's a very big part of our world. I mean, as I said, I've been in this sector for a long time and for quite a long period of time, it was relatively steady state.

13:33And now, you know, we are significantly involved in some of the key secular trends within the economy in general. I mean, you look at the FT or any business paper, and there are a whole multitude of dynamics that are impacting our industry. And we've got a brand promise about steering change and driving results because we recognized how important that is. I would say the first area of focus, John, that we have at the moment is around our overall customer experience. As I said, my transition in this industry really sees us now being an outsourcing business. So how do we ensure we got the best possible customer experience?

14:14By customer, I mean, yes, fleet managers, fleet team members, people who are making key decisions within our customer base, but also the drivers. The reality now is that we have good capability to manage driver challenges, driver calls, and allow that higher degree of outsourcing. So what are we doing, for example, to increase first contact resolution within our call centers so we get drivers back on the road possible? How can we get increased turnaround time, even auto approval rates on maintenance requests so that a vehicle gets repaired quickly, gets back on the road quickly? And so a lot of focus on the customer experience, including online tools.

15:02You know, there is a lot of data that takes place in our business. So the ability for our customers to see that through our TotalView platform and then have an app-abled capability so that customers can also use that. That's really important. The connected vehicle space, John, is one area I would definitely call out. It's not just transformative. It's revolutionary for our business. And it's going to have a lot of different capabilities along the way. We have developed our own proprietary connected vehicle solution, but we also have the ability to offer some of the sort of the bigger industry standards that are at play.

15:40But using that data to get a much closer connection to what's actually happening to the vehicle. How is it driving? You know, where is it driving? What are the diagnostics of the vehicle and how we ingest that is crucial and particularly how we combine it with the other data we have. Just imagine you've got connected vehicle data. We've got all of the detail around the maintenance. We've got fuel data. We've even got data around the driver, you know, and their safety record with a vehicle. You know, we're really getting a really strong 360 degree view of the vehicle. So that's a big part of the innovation.

16:19But electric vehicle, you're right. You know, it's it has been an important development for us as a business in all of our glory history back to the 60s. You know, we were putting vehicles on the road, but we weren't having to build gas stations. Now we're putting electric vehicles on the road and we have to implement home charging and office charging for our customers. So that's a change. We also can provide some of the energy to support that along the way. And then you get into autonomous and autonomous is also going to be throwing up some good opportunities. I think it's still very early days, I would say.

16:58And for all of the great technology that autonomous has, it still needs a fleet, you know, capability. You still need to be able to move vehicles from A to B. You need to maintain them. You need to service them. You need to fuel them or charge them. You know, all of these things come back to the capabilities that we have. I had an autonomous vehicle experience yesterday. I took a Waymo from my office to a business event. And it was in Southern California, sort of a busy, busy area. And the vehicle couldn't figure out how to pull over safely. And I had before in one of those vehicles before. And it just proved to me that we're still starting the very early days of testing this out.

17:47I actually had to help the car via the app to figure out where to drop me off. I was stuck in a loop. You know, I'm curious, as fleet management is a mature industry, where are you focused now in terms of customer acquisition? Like, what bets are you placing in expanding your market? Is it going into new industries that need fleets? Is it trying to switch someone from another provider to you, someone to go in-source to outsource? Where are the biggest bets that Merchants Fleet is making and why? Well, I think first and foremost, we're betting on growth of the sector, if you like. My experience, and particularly given the focus on commercial vehicles and business America, and that is a little different from Europe.

18:37You know, Europe, you know, some of the fleet, the fleet sector is a bigger proportion of the car mark in Europe and in the UK. But a lot of that can be sedans. It can be more benefit driven vehicles. That's not the same in the US. US is really a commercial capability. And even the sedans you're putting on the road is because it's needed for sales teams or rep visits or those sorts of things. But, you know, that tends to mean that the industry itself grows by GDP, give or take every year. And so when you really are like we are focusing on keeping corporate America moving, you know, there will be growth that comes from that.

19:15Now, actually, I mean, there are a number of different areas that we are focusing on from a growth perspective. So firstly, you know, continuing to look at opportunities on the long term side to penetrate our products and services. You know, those numbers I shared at the start around how big the market is, there's still very significant proportions of companies that are doing it themselves. You know, they are buying it themselves, sometimes even, you know, managing the services themselves. So we still have a great chance to show them the benefits of how we can bring more efficiency, how we can bring some scale effect for them.

19:54You know, what is the leverage we can offer them through the relationships that we have with our service providers? And so really continuing to penetrate there is an important part of growth, but also growing the services. As I said, we started with maintenance. Now, you know, we add in all sorts of other capabilities, managing the outfit process, you know, getting into safety products and services, managing the tolls and violations performance. So the breadth of the service, broadening out the outsourcing capability, that's another part, an important part of it. But also, you know, definitely backing the last mile sector.

20:32You know, I think having seen the big players like an Amazon and a FedEx, you know, play in that space, you now start to see some of the other big retailers building out their own capability. But also on a smaller basis, companies are wanting that sort of capability. And I said, you know, we play in that space. We're innovative in that we play in the long term and the short term space. And I mentioned the fleet share product. This is perfect in this area because this really allows companies to get like high degrees of utilization out of the vehicles, even if they don't want to lease them. They can still use that as a service in itself.

21:13So I would say that there's a lot of growth that we're looking for. And I would also say some of the assets are going to bring growth. I say, you know, as we start to go up the asset scale into medium duty trucks and vehicles, that's going to be an important part of the growth. You know, we already have like a really important part of our business, believe it or not, is passenger passenger vans, you know, minibuses. Oh, sure. Summer camps and colleges, you know, so you can see how the assets are. Our asset sizes are growing along the way. So lots of growth potential within our sector. Definitely.

21:51One of the things that's impacting every industry, and I've been talking to all of my guests about over the last month, is about how economic uncertainty and times of economic uncertainty can impact their business. And without getting into the politics of tariffs or other government policy changes, How are you managing Merchant's Fleet when there is economic uncertainty? And what do you recommend to others, either in your industry or in other industries, about how to manage through these times? Yeah, I think it's a great question, John, honestly. I mean, all of us that are in leadership positions, we have to deal with change a lot.

22:31But there's often a difference between change and uncertainty. And I think uncertainty can be really difficult to live with. In my view, uncertainty can be an opportunity driver. You have to keep your eyes and ears open. You look at COVID and how you pivot and become adaptable during a period like that can bring you great strength in terms of what you can build out in terms of new capability. But I think particularly when you've got uncertainty, and I would say it's sort of, you know, consistent with where we are now, you have to get, you know, your best brains in a room, you have to really track very closely the touch points that you can have.

23:15and you have to blend decision-making, not just on the data, but also on instinct and experience. The data is not going to be all there to support it. You're going to need to make calls. And for us, we rely on stability in certain markets. We sell quite a few vehicles that we own every year, particularly in the commercial vehicle space, cargo vans and trucks. And my experience of having been in this sector during the global financial crisis and COVID is the used vehicle market tends to be one of the first areas to weaken because it's a bit of a bellwether of the economy. You know, when small businesses and consumers start to hold back from buying vehicles, used vehicle dealers, and we own one, you know, become really tuned into that very quickly.

24:06So you've got to get the right people in the room and get an acceptation that there is not going to be perfect answers here. There is just going to be decisions and you're going to have to keep moving step by step, but still try to give, you know, assurance and confidence to your customers. You know, right now with tariffs, auto is really in the spotlight. You know, if you look at it, auto, the aluminum and steel tariffs, You know, there's there's some there's going to be some inflationary tendencies there. So we have to advise our customers very well on what we think they should do with their ordering cycles.

24:46You know, right now, you know, it's still very much open for ordering and keeping costs in the right space. But that might change. But then you go on the other side and we are maintaining and repairing all these vehicles. if the cost of parts go up, that will change some of these total cost of ownership conversations as well. So as you work it through as a business, you have to also recognize you have a role to play to guide and advise your customers in the right way with the best possible insight. And I think, you know, knowing my customers as I do, they know there is no perfect answers here, but they really appreciate the willingness for us to try and be as transparent as we can and help guide them through this process.

25:29So lots to do for sure. And, you know, we definitely are in a space where uncertainty can weigh heavy if you're not careful. But, you know, you do build some some important muscle mass that is going to be valuable for you. And, you know, as you as you will know, it's in times like these where you learn a lot and you very probably come out with some strengths that are going to be important assets for you for the long term. Your callback to COVID is a really interesting one because I can think about in my own business how much we innovated in the first three months when things were locked down that have given us tremendous advantages that we use even today.

26:15Maybe just top and tail that, John, just very briefly. That is one of the benefits that we've got from our business. So in times of uncertainty, if you've got long-term clients who might be thinking, hold on a second, there's a bit of a mix happening here. Even if they might be concerned here, they might be interested in a short-term solution. So having both propositions for them is pretty helpful at that point in time. Oh, that's interesting. Now, I want to finish up by talking about your career. You're CEO of Merchants Fleet. You've been CEO or president for multiple companies in multiple countries.

26:48but uh you started out your career i think in accounts and product and business development you know did you always have your sights set on being a ceo or or um or part of the c-suite and then what are looking back what are some of the things that you did proactively to put you in the position to get the job that you have today to really hit that with the first part of the question. Actually, I did not have a grand plan, honestly. I knew I wanted a career in business. And in fact, I did a university degree, which included a year of working in a corporate business. I actually worked for Hewlett-Packard for over a year.

27:26It was part of the degree course. So I was always very vocational, if you like, but actually left university and started in the oil and gas sector with mobile oil. And actually, it was there that I came across this thing called vehicle leasing and fleet, which then ended up becoming an opportunity. And, you know, I started in a company called Leaseplan. It was a Dutch owned business, but I was started in the UK subsidiary as an account manager. And I have to say, you know, what I learned in that role, you know, 30 years ago, 1996, still helps me today. And I would say, and as advice, the ability for leaders to see the business through the eyes of their customers is hugely powerful.