Exclusive: four industry leaders share their outlook for 2023
Change is accelerating in the fleet sector as businesses electrify their vehicles and examine new mobility solutions, so Fleet Europe assembled a panel of experts from ALD Automotive, Arval, Sixt and Volkswagen Financial Services to share their visions for the year ahead.
How will the fleet market change in 2023?
Industry experts anticipate a relentless focus on fleet costs this year as their customers face a storm of economic headwinds. With total costs of ownership jumping by 15-30% in 2022, fleet decision makers are set to pay forensic attention to all areas of fleet expenditure.
Annie Pin, Chief Commercial Officer of ALD Automotive (pictured above), said: “TCO is rising dramatically, forcing fleet managers to rethink some of their strategies. We need to keep in mind that the macro-economic environment will remain challenging and disrupted which means we will need to be ready for another year in a ‘crisis and transformation’ mode.”
Against this backdrop, she identified two areas primed for growth: the van market, to support last mile deliveries; and the perk car sector as employers look to retain key members of staff amid a war for talent. This includes extending company car type offers to wider employee groups via B2B2E schemes.
Bart Beckers, Chief Commercial Officer & Deputy CEO of Arval, forecasts modest fleet market growth in Europe over the next 12 months, depending on vehicle availability, but cautions that: “Companies will further rationalise their fleets, given the very steep increases in the TCO in recent years.”
What are the prospects for the leasing industry in 2023?
Today’s uncertain economic outlook will lead fleets to demand greater flexibility in their funding arrangements, while continuing to want the all-inclusive, fixed cost advantages of full service leasing, according to industry experts.
They forecast that full service leasing will continue to dominate the fleet market, although new products and services will start to challenge traditional, rigid holding periods.
Jochen Schmitz, Director International Fleet Sales Europe for Volkswagen Financial Services (pictured above), said: “We expect an increasing demand for more flexible mobility solutions, such as long-term-rentals and car subscriptions.”
These solutions provide an alternative to three or four-year lease commitments, with customers looking to avoid lengthy minimum terms, said Vinzenz Pflanz, Chief Business Officer at SIXT, which offers subscriptions for as short as one month, and the option to change a vehicle within the subscription period.
Changing attitudes to mobility are drawing new players to the leasing sector, which is developing into a: “Mobility market, with all existing actors reinforcing their positions: leasing companies, OEMs, banks, and potentially new very big entrants coming from the tech world,” said Pin.
Competition between suppliers will intensify, especially with the soon-to-be combined forces of ALD and LeasePlan creating the world’s largest multi-marque leasing company.
How will vehicle availability change in 2023?
Fleets will need to continue to plan for long and uncertain delivery times this year, despite improvements in vehicle manufacturer supply chains. Industry leaders forecast that vehicle availability will ‘normalise’ in 2023, but not until the second half of the year, when six-month lead times are still likely to prevail.
As a result, fleets will have to continue to order new vehicles earlier than they did before the pandemic, be ready to extend existing contracts, and stay open-minded about sourcing vehicles from OEMs that have not historically featured on their choice lists, said Beckers.
Fleet procurement teams needs to be more ‘agile’ in their choice of OEMs, said Pin, adding that ALD’s consultancy teams have developed comparative tools to help customers appraise the vehicle choices and options available.
A wider choice of vehicles is steadily appearing on Sixt’s rental fleet as it pursues its electrification objectives, with EVs expected to account for 13-15% of its fleet by the end of this year, and 70-90% of its European fleet by 2030. OEMs from Europe and the U.S. will continue to account for about 85% of Sixt’s fleet, and: “In addition to that, customers will be able to choose from an increasing range of vehicles, to which also belong Chinese EV manufacturers,” said Pflanz (pictured above).
What are the key trends in the European fleet market in 2023?
There is widespread consensus among industry experts that vehicle electrification will continue to dominate fleet agendas in 2023, but longer term macroeconomic trends are starting to undermine the traditional model of one driver, one car, one long-term lease.
Hybrid working practices and corporate environmental objectives: “Will drive companies to review their mobility policies,” said Beckers (pictured above). These reviews could help businesses to better control the TCO increases of recent times, “and truly shift the focus to a Total Cost of Mobility (TCM) as well as better monitoring and lowering their impact on the environment.”
Pin said the timeline that led from vehicle ownership to usership (purchase to lease) is now heading towards subscription and flex offers, with ‘soft sustainability’ solutions, such as car sharing and multi-modal travel becoming another area of focus.
How can fleets keep their costs under control in 2023?
A perfect storm of inflation, higher vehicle prices, rising interest rates and more expensive fuel and electricity are driving up fleet operating costs, warned Schmitz, who advised fleet managers to monitor costs closely and analyse their exact mobility requirements.
Businesses looking to achieve an instant reduction in their fleet budgets should focus on theirdrivers, or more precisely, driving behaviour, as this has a huge bearing on day-to-day fleet costs, said Beckers.
“Focus on the TCO of the existing fleet, as its semi-variable cost is determined to a large extent by the way it is used by its workforce. Embracing connected services in this respect can truly help control the running costs much better,” he said.
Looking ahead, there are a series of measures available to fleets to reduce costs in the longer term, said Pin, such as choosing smaller cars, with fewer options and accessories, and selecting new, lower priced Asian OEMs. Likewise, opting for contracts with lower mileages and longer durations can reduce lease rentals. Further support for this efficiency drive will come from a more digital approach to service delivery, added Pin, “both for the acquisition of the car and also all the ‘in life’ servicing of the car.”
What new products and services will fleets see in 2023?
Making life easier for fleets and their drivers to transition to electric vehicles is a key priority for 2023, with suppliers looking to provide consultancy advice on the selection of vehicles as well as charging solutions to help customers maximise the gains from electrification.
ALD is paying particular attention to: “The complexity of the charging ecosystem and how can we contribute to simplifying it,” said Pin, as well as “all the tools which enable our clients to better control their costs but also manage their CO2 reports, in a context of energy increases and changing regulations.”
Pflanz described each EV rental as a ‘test drive’ that helps to accelerate the uptake of electric vehicles, citing research by Kantar TNS that found 62% of respondents considered a previous EV rental had had a positive influence on the purchasing decision for their current vehicle. Capitalising on this progress, SIXT charge now gives the rental company’s customers access to up to 300,000 public charging points in Europe via its app.
Images: Shutterstock, ALD, Arval, VWFS and Sixt