A look ahead at 7 key trends set to impact international fleet strategies in 2020
As governments across the globe look to tackle fuel emissions, the growth in electric vehicles (EVs) and hybrid electric vehicles (HEVs) is accelerating. According to international finance specialist JP Morgan, EVs and HEVs will account for an estimated 30% of all vehicle sales by 2025.
This year, nearly 200,000 all-electric vehicles were sold in the European Union (to the end of September), with 73,000 of those sold in the third quarter compared to just 32,000 in the same period the previous year. (Source: European Automobile Manufacturers Association)
Scandinavia is seeing the fastest growth (sales of BEVs quadrupled in Denmark and tripled in Sweden and Finland) but Norway remains the leader with nearly 50,000 registrations, followed by Germany at 48,000 and Netherlands at just over 34,000 BEV registrations.
While we’ve seen significant recent improvements in both charge times and range, purchase and lease costs for EVs still remain relatively high and EV cars depreciate faster than their internal combustion engine counterparts, leaving fleet decision-makers with potentially low resale values to contend with.
As charging infrastructures improve, and new EV models with progressively sophisticated features are launched however, the business case for EVs vehicles over the mid and longer-term will become ever more compelling. (France, for example, has set a target of 100,000 charging stations by the end of 2020).
- The move to mobility
Connected technology is steadfastly transforming the face of fleet management, as alternatives to the company car emerge for employees trying to get from A to B as quickly, efficiently and greenly as possible.
Data is increasingly forming the bedrock of intrinsically linked fleet and mobility management. Mobility solutions now bring together real time information about the availability of alternative transport with instant booking on a single platform.
Employees are being given more flexibility to choose their own method of transport and incentivised to proactively choose greener alternatives (for example by reducing the annual mileage required to qualify for a company car, as long as they can prove that other transport options are also being used).
Digitisation is also enabling car sharing with, for example, keys being replaced by apps which allow employees to share the use of a car without any physical key.
- Private leasing
Fleet managers are increasingly looking beyond the traditional company car to alternative, more tax-efficient employee benefits.
Given the indelible shift towards fixed fee offers for bundled smartphone, TV or entertainment services, your employees, and particularly younger ones, are now far more likely to be open to the idea of privately leasing a car rather than purchasing one. In fact, figures from the Netherlands show that at least 30% of private lease contracts are with drivers in the 18-to-35-year-old age category, around 20% of which have never previously owned a car.
Companies can negotiate much better terms and extras on volume sourced but still private lease vehicles, giving their employees access to much better deals than if they went direct individually. In what Fleet Europe recently referred to as the new B2E (business-to-employee) model, employers can offer a highly flexible ‘spend it yourself’ mobility budget, a powerful weapon in the ongoing battle to attract and retain your sector’s star performers.
- Used car leasing
An increasing supply of used cars in Europe is set to give fleet managers another, potentially more cost effective, option for fleet vehicles.
Possible savings have to be balanced against more maintenance issues and Vehicle Off Road (VOR) downtime, but recent improvements in predictive maintenance alerts and a solid service history means that reliability has increased markedly.
- Subscription-based, on demand services
On-demand vehicle services now allow customers to swap vehicles based on their requirements, enabling them to upgrade from a small Group ‘A’ Hot hatch to a large SUV for a 2 week family holiday, for example.
For a monthly subscription fee, manufacturers will wrap up the vehicle with servicing, maintenance, insurance, repairs and tax. Convenience is key – Volvo, for example, will collect and return the car for servicing.
It is also looking at the potential to add further value in future by delivering parcels and even fuel to a parked vehicle.
The fact that motor behemoths like Ford, Cadillac, Porsche, Volvo and Hyundai have all entered this market space demonstrates that this is a trend with staying power and could add to the growing plethora of mobility options for fleet managers.
- Economic uncertainty
Rising trade uncertainty was cited as a driving factor for sluggish global growth by the IMF in September. After 20 years of low growth stability, the World Trade Uncertainty Index, which covers 143 advanced and developing economies, is now on a steep ascendant.
With trade wars between the US and China, uncertainty hanging over the UK’s seemingly never ending Brexit and growth figures in the UK and Germany barely nudging above zero, talk of recession is once more hitting the headlines, with all the troublesome repercussions this brings.
But what do such macro observations translate to on a micro level for fleet and mobility managers operating across multiple territories?
If trade tariffs are introduced between the UK and Europe, the retail price of import/export light vehicles may increase, potentially raising Total Cost of Ownership for purchased or leased vehicles on both sides of the Channel. Conversely though, residual values of some tariff-hit European cars may increase (as cheaper models are increasingly sought outside of Europe leaving less European ones in the used car market), reducing TCO.
- Trending technology
Block Chain technology and Artificial Intelligence have both become hot topics in the last year with much made of their potential to transform the fleet industry.
In its most basic terms, block chain technology is a digital ledger that provides an incorruptible record of data transactions across a shared network.
In a brave new driverless world, this could be used to locate permitted charging points for autonomous, electric vehicles with all billing data logged for analysis.
Similarly, paper-based vehicle safety reports, completed by drivers before and after a trip, could be automated and incorporated into a block chain, meaning that all of the inspection and maintenance information would ‘travel’ with a vehicle, allowing for instant verification of inspection and maintenance records.
Artificial Intelligence is currently being leveraged to enhance existing operations, such as predicting end of term dates for vehicle re-contracting (by cross-referencing re-contracting deals and mileage predictions) and predicting driver risk (by analysing behavioural data from telematics, a driver’s license data and accident history).
But there is also huge potential to significantly reduce TCO by helping to pre-empt service, maintenance and repair needs in connected cars, creating fleets which effectively self-book for a service, for example, when an engine warning light is displayed.
AI could also be used to flag up unexpected invoicing patterns and to create optimal travel plans by comparing forms of transport against employee entitlements, green KPIs and budget constraints.