Australia’s fleet-leasing and management sector appears to be shifting gear into consolidation mode, with Australian Stock Exchange (ASX)-listed novated salary packaging fleet company FleetPartners CFO, James Owens, recently telling Mergermarket he is surprised that it has not happened yet.

The three largest players in the industry, which leases vehicles to downstream markets, and offers fleet-management services and novated leases, are Toyota Finance Australia, FleetPartners, and SG Fleet. The rest of the highly fragmented sector comprises around 372 businesses, according to research firm IBIS World.

No single player, says Owens, has more than 20% market share.

Perhaps the anticipated consolidation is yet to occur because the sector has experienced tough trading conditions since the onset of COVID-19. This was followed by a difficult macroeconomic environment, high interest rates, and businesses halting non-essential spending.

An explanation for the lack of M&A, according to Owens, could be that used-car sale prices also rose after the pandemic, which elevated end-of-lease (EOL) income, and this requires normalisation to sustainable levels for the purposes of valuation.

Revving up

If Mergermarket data is anything to go by, it appears as though deal activity is starting to stir, with 2025 year-to-date (YTD) already seeing three transactions.

This compares with 2015 to 2020, which saw only one deal each year, followed by three in 2021, before dropping back to one in 2022 and increasing to only two in both 2023 and 2024.

The headline deal in 2024 was Australian private equity (PE) firm PEP’s take-private of SG Fleet for AUD 1.4bn, while January 2025 saw IFM Investors acquire a 49% stake in rideshare electric vehicle play Splend for an undisclosed amount. IFM executive director Adrian Kerley told Mergermarket soon after that his firm was “looking to build the next SG Fleet”.

In February, global clean energy holding company United H2 signed an agreement to acquire zero-emission transport solutions provider GoZero and its subsidiaries, including e-bus manufacturer Nexport and bus charter business NSBC Group, for around AUD 400m, as announced.

The third deal in 2025 so far, also announced in February was heavy transport electrification company Janus Electric’s reverse takeover of ReNu Energy for AUD 8m.

Research groups are certainly upbeat about recovery in the sector, with IBIS World noting that fleet vehicle lessors are set to benefit from improved trading conditions and an upswing in business confidence.

While the sector, which accounted for some AUD 3.5bn of revenue in 2024, grew at a compound annual growth rate (CAGR) of 1.3% between 2019 and 2024, according to IBIS World, ResearchAndMarkets.com believes the installed base of fleet-management systems in Australia and New Zealand will grow at a CAGR of 11.5% from 2023 to 2028, reaching 2.7 million units from 1.6 million over the period.

In favour of M&A, there are no regulatory hurdles to consolidation given the diverse nature of the industry and assets are not considered strategic in assessing foreign buyers, according to FleetPartners’ Owens. He is agnostic as to whether his company would be a target or bidder in potential M&A.

Movers and shakers

How sector consolidation plays out remains to be seen, but there are several names out there that could start engaging or revisiting deal activity, not to mention the almost 400 other companies that might be considering their next moves.

Market chatter in 2023 suggested that listed Australian player McMillan Shakespeare had its eye on FleetPartners, while other speculated potential buyers in the space have included Japanese conglomerate Marubeni.

Among other offshore players in the market are Orix Australia, Sumitomo Summit Fleet Leasing, and US-based Element Fleet Management, which acquired Custom Fleet in 2015 for an undisclosed sum thought to be more than AUD 500m.

Potential PE buyers for SG Fleet were rumoured to include Anchorage Capital Partners, BGH Capital, Quadrant PE, and Affinity Equity Partners.

Australian car-share company GoGet, which saw Sydney-based The Growth Fund snap up a majority stake in 2014 for an undisclosed sum, was speculated by local media in 2023 to be undertaking a sale process, while local PE firm Potentia and US-based TPG were thought to have offered Sydney-based Smart Group some AUD 1.4bn in 2021.

Other privately owned Australian players include Fleetcare and Fleetio.