Fleet Management in Switzerland
Swiss fleet managers have endured several challenging years, compounded by the unprecedented impact of COVID-19 and the global chip shortage.
As a result, fleet registrations fell by around one-fifth throughout 2020 and operators and the entire associated supply chain faced an ever-changing landscape dominated by legal, political, financial and environmental turbulence.
From tech, tax and telematics to emissions, EV adoption and ICE phase-out, we examine the Swiss market and the prevailing challenges facing fleet managers for the foreseeable future.
Swiss take charge on green fleets
The Swiss government aims to halve Switzerland’s greenhouse gas emissions by 2030 compared to 1990 levels and plans to become carbon neutral by 2050.
Fleet managers can play a pivotal role in helping achieve this goal, with the transportation sector responsible for around one-third of CO2 emissions.
2020 was the year the electric car first went from anomaly to mainstream. No longer a green novelty or the preserve of the wealthy, 2021 saw a surge in new electric vehicle sales worldwide and Switzerland was no exception. Four-wheel drive vehicles were one of the most popular choices with a market share of more than 50 per cent.
In 2021, 238,481 new passenger cars were registered in Switzerland. Of these, 13.3 per cent were electric, 22 per cent hybrid and nine per cent plug-in hybrid (PHEV). Compared to the previous year, the registrations of electric or hybrid vehicles increased by more than 60 per cent.
EV fleet stats were also impressive. Last year saw a 107 per cent increase in new fleet electric vehicle registrations. Hybrids grew by 40 per cent, PHEVs recorded a 21 per cent increase, while fleet diesel units decreased by seven per cent.
There are many reasons why the Swiss have emerged as early EV adopters. Driving distances in Switzerland are relatively short, people are ecologically savvy, and many have the financial means to purchase electric vehicles that are generally more expensive than petrol or diesel models.
Miles ahead in renewable energy
Since 2005 Switzerland embraced the use of renewable energies such as ambient heat, biomass, wind and solar power. But the exemplary news is that since 2020 Switzerland now generates over half of its power from green sources with hydroelectric power plants making up 54 per cent of total electricity generation. This facilitates seamless and genuinely greener driving right from the start to the end of the journey.
Green fleets will continue to be a key business focus for Swiss fleet managers as the number of new electric cars sold in Switzerland – and green energy – continue to accelerate even faster than predicted. The challenge for fleet managers is to adapt and keep pace with the EV revolution.
Putting the environment first
Increased emission penalties imposed on high emission vehicles at manufacturer level, and a reduction or exemption in road tax for low emission vehicles in some cantons are just some of the initiatives in place to drive the electrification of motoring in Switzerland.
Some cities have also announced plans to introduce ICE vehicle bans for their city centres, which will further strengthen the need for greener fleets.
High demand but short supply
Fleet planning and electrification forecasting has been significantly hindered by three major interruptions since 2020 – Covid-19, supply chain delays and the global chip shortage.
EV demand was plentiful, but supply was not.
From 2020 and 2021 there was an 18 per cent decrease in private and fleet vehicle registrations, which could be mainly attributed to production issues caused by the double onslaught of the pandemic and chip crises.
Fleet managers were faced with reduced availability of certain makes and models, and frustrating delivery lead-times of 12-18 months compared to the usual six months. This further hindered seamless end-of-contract handovers with new vehicle orders.
The worldwide chip shortage couldn’t have come at a worse time. It fuelled a spike in prices for both new and used vehicles, with fewer manufacturer deals and discounts available to help already stretched fleet budgets.
It also forced manufacturers to drop features such as heated seats, seat memory modules and infotainment features – often demanded by senior personnel. A company car is a key part of the benefits package for around half of Swiss managers, making these shortages and spiralling costs a headache for fleet managers.
More than half (53 per cent) of board level execs, 26 per cent of senior managers and 14 per cent of managers have a company car in Switzerland. Seventy per cent of top management choose the make and model themselves with an allowance of 70,000 francs and unlimited private use of their company cars. These executives do not expect to compromise on the added extras which are curtailed and compromised by the semiconductor shortage.
2020 was the year of postponed or even production stops – often at very short notice and last-minute changes to vehicle configurations.
2020 was certainly a challenging year for fleet managers with so many new hurdles to overcome.
Around 8,500 public charging points were available across Switzerland in 2021 – an increase of more than 600 compared with the previous year. This puts the public charging infrastructure density in line with the European average.
However, Switzerland falls short in private charging infrastructure, which enables car owners to charge at home.
In Switzerland around 57 per cent of people rent their apartments, making EV adoption a difficult option. A possible solution would be to follow Germany’s lead, where tenants have the legal right to install a charging station and where it is compulsory for landlords to upgrade the wiring in the building to facilitate EV chargers. However, this is not yet on the Swiss agenda.
Another challenge for fleet managers is the disparity in pricing structures amongst charging providers and charge-type, which presents challenges forecasting fuel budgets.
There is also a lack of uniformity regarding payment-methods at public charging stations, resulting in drivers having to use various charge-cards, which complicates billing and cost reporting.
Breaking down green barriers
The most common reason for reluctance to buy electric vehicles is the upfront purchase price and ongoing running costs. Many switchers are surprised that the monthly savings are not as high as expected.
Other factors include uncertainty over environmental damage caused by batteries, a lack of recharging points, range limitations and issues with home charge installations.
Electric vehicles are inevitably suited to some business drivers more than others. Currently, EVs can be used efficiently with an annual mileage of 30,000 or less, but for anyone exceeding this mileage, they may be less appealing. Drivers must also adapt their daily routine to incorporate charging the vehicle – ideally overnight to cause minimum disruption to daily fleet planning.
Some EV sceptics are also concerned that although electric vehicles powered by clean electricity have low emissions, those powered by electricity produced using fossil fuel are simply shifting pollution from the pipe to the power source.
For fleet managers, this requires a great deal of planning to find the right fleet solution to suit individual driver circumstances. In addition, they must reconcile the cost of providing on-site and home charging installations with the cost to the business bottom line and the environment.
Despite these setbacks, the development and acceptance of electromobility is fast progressing.
When tax can be taxing
In January 2022 Switzerland moved to a fixed benefit-in-kind taxation model for company vehicle use for private journeys.
This has hit personal pockets with a tax increase from 0.8 to 0.9 per cent of the vehicle list price (excl. VAT). All journeys to and from work will now be automatically accounted for through this benefit taxation rate increase. If the business vehicle is also available to an employee for private use, this is considered a private share and taxed as a non-cash benefit.
However, the good news is that this nominal increase means the true cost of commuting no longer needs to be laboriously calculated. This makes the whole car taxation process simpler for both employees, employers and fleet managers alike.
Despite the increase, a company car is still attractive from a tax perspective, compared to a mobility allowance, for example, which would be taxed in full.
Fleet financing in Switzerland is very different to the rest of Europe. Outright purchase remains the most common method of financing company fleets, with 62 per cent of Swiss companies using this method of finance compared to only 39 per cent in Europe. Financial leasing is the next most popular method, largely because of its widespread use by SMEs.
Full-service leasing remains a niche market in Switzerland unlike other European countries where this method accounts for almost half of lease finance agreements (six per cent vs 46 per cent in Europe).
Multi-bid leasing is especially popular with international companies (around 25 per cent), with international agreements and regulations supported with local supplier knowledge and contacts.
It’s impossible to look to the future of fleet management without talking telematics. Demand for fully integrated online reporting and monitoring tools and smartphone apps is increasing.
Drivers want to see live contact details for service and repair partners, tyre and breakdown providers along with nearby fuelling or charging stations online. Fleet managers want access to vehicle performance and driver behaviour related data 24/7.
Telematics solutions allow them to improve driver safety, deliver cost efficiencies and provides an overview of how much a vehicle is used for private and business purposes and provides invaluable performance data for fleet managers considering switching to an all-electric fleet.
The Swiss way forward
The Swiss fleet industry will continue to see tech innovation and greener fleets as a business priority in 2022. EV adoption is expected to grow further in 2022 as more manufacturers bolster their high-end vehicle offering.
Deeper telematics integrations, improved 5G and enhanced customisable fleet software will boost operational efficiency, improve data security and enhance the performance and safety of fleets. All positive news for a greener, smarter and less volatile 2022.