Agility key as Nexus moves into fleet services

The Leeds company has built a £38m business on its innovative online trading system, which allows it to quickly search through a large supply chain of providers to find suitable vehicles for business users.

Nexus plans to launch a new service next year which will make it easier for firms with mobile workforces to buy fuel and other consumerables.

It has already expanded into outsourced rental management and white label services.

Neil McCrossan, chief executive, told the Yorkshire Post: “Diversifying allows us to sell more services to more customers and gives those customers more reasons to stick with us for longer.

“Rental is not of strategic importance to a lot of businesses. They can view it as a commodity.

“We don’t wanted to be viewed as a commodity. We want to provide strategic value to our customers.”

The private equity-backed company operates between rental companies and end-users including blue chips, SMEs and Government departments, “adding value” in the middle.

Its revenues from the car insurance market have been hit by a fall in the number of accidents and quicker repair times and reduced corporate travel as businesses cut costs.

The Office of Fair Trading has also launched a probe into the car insurance industry, describing it as “dysfunctional”.

Mr McCrossan said: “That sector is in a state of flux. It’s going to change going forward.”

Group turnover this year is likely to be down on last year’s £38.2m, which Mr McCrossan blamed on a poor winter trading period due to milder weather.

“Insurance claims are significantly down, that’s impacted us,” he said. “Take the insurance replacement market away, the rest of the business is performing extremely well.”

Nexus claims double-digit growth in customers and transactions and has added to its sales and marketing team.

Mr McCrossan said: “If you are relying just on existing customers your business will be shrinking.

“Companies are travelling less. Fuel is expensive, so are hotels. The only way to combat that is to win more customers.

“It’s the only way to succeed in the current climate.

“The days of floating on the performance of the wider market have long gone.

“The market is smaller, but competition has not gone away.

“You just have to be quicker and more agile and do more things.”

Mr McCrossan led an £11m buy-in management buyout of Nexus in 2008 with Isis Equity Partners taking a majority stake.

Nexus went on the acquisition trail, first buying the vehicle rental arm of Huddersfield-based FMG Support in a deal worth £4.4m in 2008 and then buying Adapted Vehicle Hire Limited for an undisclosed sum in 2010.

Mr McCrossan, a veteran of the vehicle rental industry who previously held vice president roles at National and Vanguard, said the company is now focused on organic growth.

He said: “In the past we would have looked at acquisitions. We want to conserve our cash. We don’t want to take on any more debt.

“We are not alone in that. Even when we see opportunities sometimes we are not always going to take them.

“Our business is doing well but it’s not easy. It’s still a challenging environment.”

Last month, Nexus announced a raft of new contract wins with customers including Ogilvie Fleet Ltd, Balfour Beatty Fleet Services, LeasePlan UK and Pendragon Contracts.

Asked about the majority shareholder Isis’s plan for the future, Mr McCrossan said: “At some point they will exit because they are a private equity company.”

He added: “In a normal cycle the original investor might have been out again. The cycle has just elongated everything.

“It’s been an interesting journey. Nexus is a lot bigger and better and a more rounded business than we were four or five years ago.

“But the market is tough and it is one shock wave after another. Sometimes it’s specific to the market, sometimes it’s general macro economic background we are all having to compete in.”

Nexus has around 100 employees. Non-executive directors include John Leigh, the former chairman and chief executive of Europcar UK.