Fleet management, globally, is a challenging and evolving arena for operators and the wider supply chain – from a legal, political, financial and environmental perspective. Here we look at the market infrastructure and clarify the conundrums of fleet management in the Netherlands, from evolving tax implications and emission regulations to EV adoption plus the impact of WLTP.

 

Netherlands says no to fuel

The Netherlands continues to turn its back on diesel and petrol by embracing smart mobility – more than 24,000 new electric cars were registered in the country in 2018 (three times as many as bought in the previous year). There are now almost 50,000 fully electric cars on Dutch roads – more than twice as many as there were at the end of 2017. It is now has the second largest plug-in market concentration per capita in the world after Norway.

Even the used EV market is growing – in the first half of 2019, Dutch car dealerships sold 3,124 used EVs – triple the amount in 2018. This rise could indicate a breakthrough in consumer confidence in electric mobility.

 

Legislation making in-roads for EVs

The Dutch government is committed to making all new cars emission-free by 2030 – virtually banning petrol and diesel cars in favour of electric and battery-powered vehicles. The government has introduced initiatives such as a lower tax of 4 per cent, up to a fiscal value of €50, 000, on benefit in kind for all electric car users. Diesel, petrol and even hybrid car drivers are subject to a 22 per cent tax bill. However, despite the predicted increase in demand for electric vehicles, tax will increase to around eight per cent, up to the value of €45,000 from 2020.

 

The impact of WLTP

The Worldwide Harmonised Light Vehicle Test Procedure (WLTP) has had a significant impact on the automotive market and subsequent fleet decisions, from make and model to cost of purchase and running efficiencies.

In the Netherlands, on top of VAT, an additional tax (BPM) is charged on vehicles based on their CO2 emissions. Since the introduction of WLTP, which resulted in an increase in CO2 emissions, some models of cars became a few thousand euros more expensive, almost overnight. So much so it makes buying a new car in the Netherlands more expensive than buying the same car in Germany. Fleet managers were forced to re-evaluate their policies and adjust leasing budgets and the CO2 level thresholds within their car policies.

 

Lease or buy?

Consumer culture has shifted from ownership to usership – the more aware people become about the true costs of car ownership, the more attractive private leasing becomes.

A growing number of employers are therefore looking to provide staff with a more flexible package of corporate benefits and to widen access to personal leasing products. Between 2016 and 2018, the number of private lease car contracts in the Netherlands almost tripled. In 2018, the number of lease registrations in the Netherlands went up 20.4% to 443,000. The lease market now accounts for 47 per cent of all registrations, compared to 42% a year earlier.

Lease companies are a key player in the Dutch automotive industry representing at least 45% of all new-vehicle sales last year.

 

Many Dutch companies are updating their fleets to petrol only following the introduction of the new 50,000km/year cut off point. This has had a drastic impact on the diesel car market but with the surge in electric vehicle sales, it’s surely only a matter of time before petrol faces the same fate as diesel. Worldwide, the Netherlands is one of the frontrunners in electric vehicles so it stands to reason that they will soon dominate the leasing market too.

 

Fleet technology trends

The integration of mobility services through new technologies is destined to be headline news. Mobility as a Service (MaaS) will soon be mainstream and fleet managers need to be forewarned how this will impact their job function and budgets. By offering a diverse range of transportation options from train to taxis, car or bike share to vehicle leasing, MaaS will bring added value and efficiency through a single application and payment channel which can be integrated into expense management systems.

The growing importance of car sharing, as well as self-driving vehicles, will also elevate the role of fleet management in developing and adopting this mobility chain. Fleet managers should be getting ready for the sharing and driver-less revolution – shaping their business infrastructure for the future of seamless door-to-door mobility.

 

Tackling congestion head on

With 139,000km of public roads, the Netherlands has one of the most dense yet best road networks in the world – but congestion is a real problem particularly around rush hour for fleet management.

The government is committed to tackling the problem. It has introduced peak, rush-hour or plus lanes on the motorway network to allow motorists to use the hard shoulder to improve traffic flow. Another initiative, entrance ramp controls mean that vehicles are only allowed on the motorways in small numbers. It measures how many vehicles there are on the motorway and how fast they are driving.  Roads to the Future is an innovation programme which focuses primarily on finding smart solutions for traffic jams and environmental pollution.

The Dutch government also wants to abolish ownership and sales taxes on automobiles and instead levy a fee on every kilometre driven with the aim of cutting congestion in half and curbing carbon dioxide emissions by 10 per cent.

 

Biggest challenges facing fleet operators

As with many tech-driven sectors, Fleet operators also face the challenge of recruiting and retaining highly qualified personnel as they move on looking for the next challenge.

Negotiations on price structures in this non-transparent sector can also be demanding and time consuming. The quoted first price is rarely the best price and fleet managers must be prepared to negotiate contract terms and conditions to ensure they get the best TCO and the end of the lease term.

In addition, the ‘big’ fleets are now operating within the confines of IFRS rules as more and more companies use IFRS as the financial reporting standard. Of course, this inevitably leads to less demand for lease cars, which conflicts with the fleet interests of many organisations. Leasing companies are now changing to invoicing lease costs with a split for IFRS costs.

But the most pressing issue is that although the Netherlands is a front runner in EV adoption, it seems production cannot keep up with demand.

There are delivery delays of 14 to 18 months for some makes and models following the introduction of WLTP and the availability of cars with a 400km plus range is too limited to make it a viable option for fleet managers.  

So, while the infrastructure of charging points and governmental support is up and running, the output isn’t. There is a huge call for manufacturers to increase their capacity to satisfy this growing market before fleet managers can fully commit to running fully green fleets.