30 May 23

“Car remains key in fleet strategy”

Despite economic turbulence, 9 out of 10 companies worldwide expect their fleets to grow – or at least remain stable – over the next three years. That confidence is one of the remarkable nuggets in the Arval Mobility Observatory’s 2023 Fleet & Mobility Barometer, published today. One of the drivers of fleet optimism: “Companies are in a war for talent, and cars are an excellent tool to attract and retain them”, says Yaël Bennathan, Head of the Arval Mobility Observatory, in an exclusive interview with Fleet Europe.

The Arval Mobility Observatory’s annual Barometer, now in its 19th annual edition, is an important point of reference for the current state and future development of the fleet and mobility ecosystem. And it’s bigger and more global than ever. With the addition of the U.S., Canada, Mexico, Australia and New Zealand – covering Element Arval Alliance  countries – the survey now comprises 30 countries. In all, nearly 5,900 interviews were conducted in Europe, 1,650 in the Americas and 1,100 in the rest of the world.

“In the face of inflation, supply issues and high interest rates, we see that company fleets remain resilient, and that cars remain a key element in their strategy”, says Yaël Bennathan, (pictured). Here, exclusively on Fleet Europe, are five key takeaways from the Arval Mobility Observatory’s latest Fleet & Mobility Barometer. 

1. ‘War for talent’ driving fleet optimism 

  • 64% of companies surveyed expect their fleet to remain stable over the next three years, while 27% expect growth. That adds up to 91% of companies with a positive outlook on fleet size.
  • The largest companies are more optimistic about car fleet growth (35%, vs. 29% on average).
  • As for LCV fleets, mid-sized and large companies expect more that those will remain stable (65%) than both small and very large companies (59%).

“What’s striking, is the sharp increase of HR considerations as a reason for fleet growth”, says Ms. Bennathan. “In the previous survey, ‘retaining employees and attracting talent’ was an important factor for 29% of companies. This year, it’s 39%.”

There’s also been a sharp increase in cars offered to previously ineligible employees, either via for example salary sacrifice or related schemes (18% to 26%), or in shared vehicles (17% to 24%). Again, symptoms of the war for talent.

Conversely, working from home – everybody’s go-to solution during corona lockdowns – turns out to have a rather limited effect: only 17% of companies have changed their mobility policy (or are considering it) to accommodate the option. 

2. Full service leasing: SMEs are catching up

  • 35% of all companies expect to increase or introduce full service leasing in the next three years.
  • This financing formula is now equally popular across all segments, as the smallest companies have almost caught up (34%).

Even in mature markets like Belgium, Italy and France, full service leasing demonstrates the remarkable ability to maintain its growth potential. Economic turbulence is one driver, as the formula allows companies to optimize their spend on mobility – and especially plan it better, given the high rates of inflation. 

“But it’s about more than that: full service leasing also helps companies increase the operational efficiency of their fleets, because they can rely on the assistance of fleet and mobility specialists”, says Ms. Bennathan. “This allows them to focus on their core business. So it’s not just money they gain, but also time and added value services.”

For fleet suppliers, the result regarding SMEs points to a specific market segment with future potential.

3. EV adoption is both accelerating and normalizing

  • For their car fleets, 70% of companies have already implemented (or are considering implementing in the next three years) at least one of the following alternative powertrains: BEVs, PHEVs or HEVs. 
  • Overall, 50% already have at least one electrified technology in their fleet today. That’s a general trend – irrespective of company size or country. 

“Even though EV adoption varies significantly per country, overall we see it is really accelerating, with increases of around 15 percentage points in some countries”, says Ms. Bennathan. 

Some examples: “In just one year, the share of fleets having adopted (EVs increased from 42% to 61% in Italy, from 61% to 78% in the Netherlands, and from 67% to 79% in Norway.”

The figure for the U.S. is 58%, which is above the global average. The Arval Mobility Observatory sees a clear relation to the various measures by the U.S. federal government to stimulate the adoption of EVs. 

The main reasons companies cite for going electric are environmental (37%), followed by fuel cost (33%), CSR compliance (27%), and TCO (26%). “What’s remarkable, is that all reasons are cited to a lesser degree than in previous years. That indicates that electrification has become normalized, internalized.”

So, where is this going? Within three years, companies expect 39% of their cars and 26% of their LCVs to be electrified. Specifically, 18% of car fleets will be BEVs. That’s slightly higher in Europe, where fleets expect 20% of their cars to be fully electrified in three years, and only 55% still to be ICEs. (The remainder will be mainly PHEVs and HEVs). 

4. Three drivers for massive implementation of mobility solutions

  • 71% of companies have implemented at least one mobility solution, a further 17% are planning to do so in the next three years. 
  • The most popular policy types are: covering public transport expenses (20%), a mobility budget, a ‘cash or car allowance’ (both 16%), and private lease or salary sacrifice (13%). 
  • The most popular mobility solutions are ride-sharing (19%), short- or mid-term rental (18%) and bike sharing or leasing (15%). 

“There are three reasons for the massive adoption of mobility solutions. Firstly, because it aligns with CSR policies; secondly, because it is seen as an important element of corporate branding; and third, because of the HR angle. In other words: as a tool in the aforementioned war for talent. In 26% of cases, these mobility solutions are offered at the specific request of employees”, says Ms. Bennathan. 

Another important reason why mobility solutions are so popular, is a change over time in their purpose. “A few years ago, it was not clear whether these solutions would replace the company car or not. We see now that the answer is no. They are add-ons – extra options, not replacements. That is in line with what employees want: solutions that are sustainable, but also flexible.”

5. The rise of telematics is unstoppable

  • The share of companies that uses telematics in its fleet shot up 10 percentage points in just one year, to almost half (38% to 48%). 
  • The penetration of telematics is higher in LCV fleets than in car fleets (36% vs. 31%). 
  • And it’s higher in the fleets of the largest companies than in those of smaller ones (54% vs. 42%).

“We see telematics grow in all countries. There is an increased openness towards the potential of connectivity, even in those countries that are historically less keen on sharing data, such as Germany and Austria”, Ms. Bennathan observes. 

Why is that? “The amount of data generated by vehicles increases, and with it the potential to deliver more and better services. That’s on the supply side. And on the demand side, companies are getting more sophisticated about how to use this data to their advantage. Telematics is a good tool to follow up on your CSR targets, and to monitor your fleet cost.”

It is expected that the impending implementation of the EU Data Act - adopted by the EU Commission and currently under negotiation by the European Parliament - will provide a further boost to the popularity of fleet telematics by regulating how data is shared, Ms. Bennathan points out.

Click here for the full results of the Arval Mobility Observatory’s 2023 Fleet & Mobility Barometer

Image: Arval Mobility Observatory

Authored by: Frank Jacobs