The GRENKE Group: “Good things come in threes.”

The GRENKE Group has weathered the financial crisis and is once again focussing on growth. In 2010, the Group and its franchisees succeeded in expanding new business by almost 40 percent – and the figures for conven- tional small-ticket IT leasing were up even further, by 43 percent. Wolfgang Grenke, Chairman of the Board of Directors, and Dr. Uwe Hack, deputy chairman and CFO, explain these impressive results – and what the future holds for GRENKE.

 

Mr. Grenke, Dr. Hack, the GRENKE Group is penetrating new markets throughout Europe while continuing to expand within the German leasing market, where it al- ready has a large footprint. What is the secret of your success?

Wolfgang Grenke: As is often the case in life, here at GRENKE good things come in threes: a robust business model, an solid product portfolio and an excellent relationship with our customers. This approach is bound to be successful everywhere – no matter what the country, customers always value quality, simple solutions and a local presence.


Dr. Uwe Hack: Given that financing is at the heart of our business, you could also add that this connection is also where our value added starts. There where we obtain our refinancing, on the capital market. Investors such as banks appreciate quality, simple so- lutions and short pathways as well. Translated into the language of the capital market, this means low risk, high transparency and therefore uncomplicated access to our refinancing instruments. With GRENKE BANK we are now offering this access to our own cus- tomers as well.

Looking at the growth of the GRENKE Group, this three- pronged strategy seems to have been very successful – new leasing business in international markets rose by 63 percent in 2010.

Verteilung des Neugeschäftes

Wolfgang Grenke: Indeed, we are now generating more than half of our new business outside Germany. Firstly, financing investments through leasing is generally not as well advanced elsewhere as it is in Germany, for instance. Secondly, in many countries we are establishing a completely new market with our specific brand of small-ticket IT leasing. Basically, we are repeating what we already did in Germany many years ago. As we are gearing our offering specifically towards smaller small and mid-sized companies, local presence is a key factor. Especially in the less well developed markets, customer proximity is defined by geographical proximity. This is why we reach out to new markets gradually and start with an attractive core region. Once this has been tapped, we implement “cell divisions” and focus on a further region until we have the entire market covered.

Neugeschäft (in Mio. Euro)

Dr. Uwe Hack: Italy is a prime example of this form of expansion. Beginning in 2001 in Milan, Italy’s business powerhouse, we have since opened five further offices, three in the last 12 months alone. These give us a strong geographic presence in northern Italy, and our next step is to fully exploit the potential of this attractive economic region for our business. We accomplished a great deal in Italy in 2010, with new business skyrocketing by 158 percent. Simi- lar results have been achieved in other countries. For example, new business in the UK and France is up 140 and 54 percent respectively.

Does this strategy only work in Europe?

Wolfgang Grenke: Europe has always been our focus up to now, and will remain so in the future. We have yet to fully exploit the full potential of this huge region. But there is also potential for us to export our business model on a wider international scale. At present, we are considering a move into the Brazilian market, and we have concrete plans to gain a foothold in Turkey in 2011. In an economic sense, at least, Turkey is clearly a part of Europe and it enjoys very high growth. We already count a number of Turkish business people among our loyal customers here in Germany and no doubt this relationship will underpin our progress in this area.

Here in Germany, the market is excellently served by 23 GRENKE offices. How does the Group plan to continue to grow in its home country?

Wolfgang Grenke: Actually, if you include our car leasing franchisee in Karlsruhe, we have 24 offices. In markets where we have a strong presence, such as Germany, getting closer to our customers must be defined differently – for example in terms of position- ing. Further elements of our growth strategy include a broad product portfolio that allows us to address specific needs, and additional sales channels that enjoy high acceptance. These include attractive and flexible investment products for our German cus- tomers via GRENKE BANK. As GRENKE BANK is operated exclusively online, clients enjoy fast and simple access to this offering.

Dr. Uwe Hack: An example of a country-specific or regional product offering is our partnership with NRW.BANK in the German state of North Rhine-Westphalia. Together, we provide SMEs and the self-employed with subsidised loans for leasing new business equipment, and over 2100 customers have already benefitted in this way. And with regard to new sales channels, since March 2010, GRENKE BANK has been accredited with the KfW-Mittelstandsbank start-up programme – offering funding to start-ups, the self- employed and small companies that have been in existence for less than three years. We have even developed an innovative Internet platform to provide businesses with quick and easy access to the scheme.

What potential does the online channel hold for GRENKE?

Wolfgang Grenke: We already use the Internet as a key sales channel and it continues to grow in stature. For example, the GRENKE online portal allows our German leasing customers to view their contract details, make changes, and get answers to their questions. Both in Germany and internationally, we are expanding our online services, for our conventional small-ticket IT leasing business, as well as for our more recent financial products. Just take a look at our Website, we already speak the language of every country with a GRENKE presence.


Does this mean GRENKE may someday be operated solely as an Internet business – that not only GRENKE BANK but the entire GRENKE offering might in future only be available online?

Dr. Uwe Hack: No, certainly not. A local presence and being close to our customers are and will remain key aspects of our brand core. Identifying and leveraging new routes to our clients play a part but even when it comes to our Internet offerings, the customer remains central to our service. This is true today, and will remain so in the future.

Mr. Grenke, Dr. Hack, thank you for your time.