2023 OUTLOOK

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Written By: Brendan P. Keegan, Chairman, CEO & President

2022 was one of the most important and more successful years for Merchants Fleet ever – and that is an understatement!  In an industry contending with consolidation and merger activity, supply chain challenges, rising interest rates, record-high inflation, an international war, and uncertainty of what 2023 would bring, Merchants was the rock our clients, partners and employees could count on. Merchants invested in its’ culture and people and had its best year ever for employee satisfaction and retention.  Merchants delivered innovative solutions to navigate vehicle shortages, stay on the cutting edge of fleet, and find creative ways to make their fleets profit generators for their business.  And all the while, Merchants was able to navigate through a successful transition to new professional ownership with no disruption to any of our constituents.

In 2022, our focus was ACCELERATING Responsibly. Over the past 12 months we honored our strong commitment to being a leading ESG responsible company. We were McLaren Racing’s inaugural partner in Extreme E and celebrated the first podium winning female racer in McLaren’s history. We began multiple new ESG initiatives, led the charge in fleet electrification by installing infrastructure and putting even more EVs on the road, and developed new partnerships across the ESG landscape. Equally, we honored our commitment to being the most innovative fleet management company on the planet. We strengthened our relationships with clients, we were back to holding onsite meetings at our Fleet HQ with most of our clients, we strategically consulted with our clients to navigate supply chain challenges and the transition to electrification. And we brought on new ownership with nearly a trillion dollars under management to fuel us with the resources to continue our organic growth and remain on the cutting edge for our clients, without the need to merge with another fleet company, like many others in the industry.

We had another amazing Fleet Summit, a special event where our team transforms our HQ and blacktop parking lot

into both a convention center and a “fleet industry carnival” for everyone to enjoy. And to top it off, the Merchants story was featured on Fox Business’ Inside the Blueprint, bringing awareness of the fleet industry’s importance to our everyday lives in the US, with a potential reach of 80 million viewers.

Everything we’ve done the past few years set us up to be in the pole position in 2022 and we didn’t let the opportunity go to waste. But… I’m a numbers guy, so here’s some data to back it up:

  • 175,000+ managed units for our clients
  • 38,000+ vehicles were ordered for our clients*
  • 26,000+ Merchants mobility vehicles 
  • 5 million packages delivered per day during peak season in Merchants Mobility vans
  • 2022 U.S. Best Managed Company by Deloitte
  • 2022 Great Place To Work® Certified
  • 2022 Fast Company World’s Most Innovative Companies
  • 2022 Inc 5000’s Fastest-Growing Private Companies
  • 3,500 hybrid and electric fleet vehicles
  • 6,200+ vehicles sold at Merchants Auto
  • 500+ employee volunteer hours during our first ESG contest

 

As we enter 2023, many things will stay the same – we will continue to push ourselves to ELEVATE, we will think and act differently to INNOVATE, we will act decisively to ACCELERATE, and our theme for the new year and our ongoing journey will be ENDURANCE.

As a very good company, focused on evolving into a great company, we must do this over a long period of time, as Jim Collins teaches us in “Good to Great”. Over the past five years we have elevated, innovated, and accelerated, becoming an industry leader in the process. We have developed the processes and built a company culture that inspires our team to keep going the distance for our clients. With endurance in mind, this year we will grow our offerings, speed up processes, and keep innovating in everything that we do. If we’re not disrupting the preconceived notions of what it’s like to partner with an FMC, we’re not doing good enough. Our focus is to be great not only in 2023, but in 2024, 2025, 2026, 2027 and beyond, to improve annually and to offer our employees, clients and partners an enhanced experience.

How are we going to do it? Well, I’m lucky to work with the best leadership group in the industry who will make this their focus in 2023 and beyond:

CLIENT EXPERIENCE

Merchants will remain the ONLY one-stop-shop for fleets looking for Class 1 to 8 vehicles, short-term to long-term, despite the continued supply chain hurdles expected through the end of 2023. We’re dedicated to getting every fleet the vehicles they need to stay on the road by strengthening our already popular programs like FleetShare, ReadyFleet and Sale & Leaseback. Our Client Experience team makes use of an in-house developed playbook, we will keep using it this year, and evolve it to meet the needs of our clients in the ever-changing fleet landscape.

To deliver our clients with the exceptional service they’ve come to expect with Merchants, we’re aligning our Client Experience and Client Development roles into one team. We’ll also be positioning our Fleet, Commercial, and Auto resale teams to create one remarketing business to provide our clients with the most options, and the easiest way to review inventory possible.

Through connected vehicle hardware built into nearly every modern vehicle, the reality of linking every one of your fleet vehicles into a single, near real-time fleet management interface is here. Every fleet should be using telematics of some type, and with connected vehicles becoming the norm, we want to help clients take advantage of the data and insights they might be underutilizing. We’ve continuously invested and improve our TotalView platform, and clients will benefit from a seamless experience when managing their vehicles as soon as they hit the road.

For clients thinking about EV Adoption, Merchants will not only continue to help fleets determine their best options for converting from ICE vehicles to EV’s, but also identify, plan, and implement the needed infrastructure to power their fleets. We have dedicated the most resources to helping clients begin their EV adoption journey, and we are not stopping.

TECHNOLOGY ENABLEMENT

2022 represented our largest investment in technology in Merchants history, and our plan is to accelerate again in 2023 with an equally large investment across all of our existing technology platforms, and even invest in some new ones as well.  

Our lease accounting system will soon be replaced with a new cloud-based platform. This is a large project with five major components, but the result will help future-proof us through securitization support, scalability, improved maintainability, and significantly improved processing time.  

Another focus will be on order management and making it even easier for our team to receive, execute, manage, track, and make updates to vehicle purchase requests. This will lead to improved scale and accuracy for our clients, providing better clarity for every transaction.    

We’ll also be improving the operational efficiency and scale of our Mobility team by upgrading internal technology and processes through vehicle location/asset status, self-service customer portal, operational workflows, and AR/cashflow reporting. 

OPERATIONAL SCALE

Our leadership team, being co-owners, ensures that Merchants will never lose sight of what got us here – our high-touch service, flexibility, and client-first attitude whether they have a 10-unit or 100,000-unit fleet.  

When thinking endurance and operational scale, a great example is our upfit department which is so critical to many of our clients. We’re investing in our national team in 2023 that moves faster, handles more work, and reduces the cycle time from engineering to drop shipping. This is just one aspect of the client experience that will improve through scalable processes, but we’ll see improvements in Registration, Onboarding, Fuel Management, Claims, and so much more. 

We developed a playbook to help clients navigate the challenging landscape of today’s automotive market. These strategies will continue into 2023, and we’ll continue to refine and improve wherever possible. Of course, we’ll be able to use our Mobility team as a strategic arm for clients waiting for fulfillments, with ReadyFleet and Rent to Lease as the primary levers. For smaller clients who need to supplement their fleets, our Commercial Sales team can supply lightly used, quality vehicles fast, no matter where they are in the country.  

EMPLOYEE ENGAGEMENT

One of the best aspects of being Chairman, CEO & President of a company like Merchants is the amazing team I get to work with every day. Our HR team is fine tuning the ways they attract, develop, and retain our talent. They’re specializing their recruiting strategy, providing employees the development and resources needed to grow at Merchants, and are continuing to build on our award-winning culture (90% of our employees agree Merchants is a great place to work, versus a market average of 57%).  

In 2023 they’ll be streamlining our pre-hire process and taking the entire onboarding process to the next level. Our New Grad Rotation Program was a hit, so we’ll be working with more graduates on a quarterly rotational basis so they can learn what drives Merchants. Our Intern Program was also popular, and we’ll be scouting for new talent from local and out-of-state universities to give them a taste of Merchants. Both programs have a goal of 50% retention.  

Our Ambassadors & Allies Program focused on DEI initiatives was a success and Cohort II will begin in 2023. I expect an even bigger turnout for employees to learn about diversity and inclusion, and ways Merchants can support the differences that drive us.  

We are making even stronger investments in all of our employees in three very special ways in 2023 – we have increased the company’s contribution of health care to 90% of all premiums, we have increased our 401k match program by over 25%, and we have invested in “Feel Good, Do Good and Be Good” days supporting time out of the office focused on family, friends and mental health. We have always offered above market benefits, but in 2023 we have propelled into a brave new future of employee support.  

Finally, we’ll be offering two new incentive options for employees looking to purchase an electric vehicle and will continue to offer the charging hardware reimbursement program that started in 2022.

Brendan P. Keegan with EVTHE VIEW AHEAD

This year, our goal is to build ENDURANCE from the first to last mile. We want to deliver a client experience so exceptional that we make it look easy. It takes years of rigorous training to make something so hard look that way, and that’s where Merchants finds itself today. Behind the scenes we’re refining, improving, learning, and innovating to stay the fastest growing fleet management company in North America. We wish every one of our clients, partners, employees, colleagues, and friends a healthy and prosperous new year, let’s make 2023 amazing. 

Enjoy the JOURNEY!

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