In 2015, fleet customer is king and a half

In Europe more than elsewhere, vehicle fleet sales are crucial to the business strategies of car manufacturers. But the rest of the world is catching up. That can be concluded from the survey Fleet Europe organised with the main car brands in Europe. The importance of fleet sales is measured in more than volume alone: fleets are pioneers for technologies that will eventually reach the rest of the market. And this year, that technology could well be telematics, transforming itself from doubtful option to indispensable tool.

Corporate vehicle sales are like the canary in the coal mine: to OEMs, their rise and fall is an early indicator of a wider recovery, or recession. At present, indications are that fleet sales are rising faster than automotive sales to the private market. This confirms the overall impression that the economic picture in Europe is brightening up. But the faster-than-average rise of fleet sales has another effect: it will increase the already considerable attention that manufacturers lavish on their corporate clients, who grow ever more important.

Similar-sounding claims
Indeed, OEMs are sparing no effort to highlight the fleet-specific assets of their product ranges and the supporting services they offer. Naturally, many of these claims will overlap. Each brand boasts about a range of car and/or LCV models that is uniquely suited for the fleet market, with its high expectations on TCO, emissions, safety, and especially service and support (multi-year warranties, service agreements, etc.)

It's the fleet client's task to examine similar-sounding claims for vital differences. Škoda, for instance, is one of many brands keen to stress that its services dedicated to corporate clients can be deployed across its dealership network, but also in specialised fleet centres. Renault, on the other hand, relies on its Single Point of Contact principle (as well as its widely-spread network) as a unique selling point for its fleet-oriented sales. 

Biggest growth opportunity
There are a number of reasons why fleet sales matter to OEMs. For one, because working through large corporate and public-sector fleets provides them with brand visibility. Or because it allows them to make the most of their high standards in sustainability, safety and vehicle qualities relevant to fleet customers. But the main one is that their share in overall sales is already huge. On average, fleet sales represent between 30 and 40% of a manufacturer's overall sales in Europe.

Even a brand like Maserati, which has a very upmarket and fairly narrow model range, and which started with dedicated fleet sales only in 2013, plans to sell 20% of its Quattoporte Diesel and 30% of its Ghibli Diesel to the fleet sector in Europe. The outlier on the other side of the average range is Volvo, which shifts 51% of its sales volume in Europe directly to the fleet sector.

Accelerating globalisation
The percentages mentioned above are figures for Europe – the share of fleet sales in other regions is generally significantly lower. But all OEMs report that fleet sales in the rest of the world are rapidly catching up – a process that is expected to accelerate in 2015. This trend is in line with the global and older trend in automotive sales generally.

A few years ago, most OEMs would have had roughly the same target markets in mind for fleet sales expansion: the BRICS. But emerging economies have not proved immune to economic slowdowns and geopolitical accidents. So for the foreseeable future, the strongest markets for fleet sales (if not in growth, then in overall performance) will continue to be in the economically recovering markets of Western Europe.

The United Kingdom, Germany, Austria and the Benelux countries are listed as interesting growth opportunities for fleet sales in 2015. Size-wise, Germany and the UK are obviously the most interesting of the bunch. The geographic field is complicated by the fact that many European OEMs of course have an advantage in their domestic markets – Fiat in Italy, Renault in Italy, BMW in Germany, etc. - increasing the hurdles for other OEMs to jump over.

Not coincidentally, markets with well-established domestic manufacturers tend to be larger, and richer in potential – factors which help explain the success of those domestic OEMs. Which also explains why non-domestic OEMs are keen to challenge the dominant local brands, from an underdog position: offering an alternative to the established product range, and a high level of service. 

Future variables
Geographic market divergence is but one of the many variables determining the future of OEM strategies vis-à-vis fleet sales. Which of those variables will predominate in the future, is very hard to predict, leading some OEMs to bank on starkly different mixes of products, services and infrastructure in anticipation of the market needs of tomorrow.

Some of those variables will relate to CO2 legislation (e.g. the ever stricter EU emissions norms, but also growing awareness and tougher, carbon-based taxes elsewhere in the world), local stimuli for alternative motorisations (explaining Tesla's fleet success in Norway, for example) or, as mentioned before, strong local competition from domestic OEMs.

The most remarkable, and most generalised expectation for 2015, however, concerns telematics. Opel, for instance, states that while alternative fuels will continue to play a role, it is telematics that will become increasingly important and widespread in the fleets of the future.

Not so long ago, the very thought of tracking vehicles and measuring driver behaviour via on-board technology was summarily dismissed as being too complex, too fraught with concerns over privacy and data protection. But a combination of two factors now seems poised to provide telematics with its big breakthrough in the automotive industry: the steady advancement of the technologies involved; and the fact that OEMs seem poised this year to introduce those trackable technologies onto the market via the incubator of many previous innovations: the fleet sector – not only more receptive of change and more on the lookout for cost reduction, but also characterised by a more 'captive' type of driver than the private sector.