Spread the ideas, not the virus: Addressing the aspiration for flexibility
We all feel the same anxiety for ourselves and the ones who are dear to our heart, close to us or far away; we share the same thoughts for the elderly, the lonely, the poorest people who might suffer harshly in the pandemic and the lockdown; for the ones who enjoy unrestrained access to telecoms and internet, we can keep in touch with friends and relatives in spite of the distance, share with them humour and hope.
We also ask ourselves the same questions regarding the impact of this worldwide sanitary crisis on the economy and the society; we are all eager to draw the lessons on how to prevent, manage, dampen such crises in the future, how to do it efficiently in our democracies. I do not have any sharper insight on any of these questions, so please let me just raise them and not attempt to give lessons.
As far as the mobility sector is concerned, I have read many comments about the demise of the new concepts of sharing, let alone of the EV, because of the drop in the price of oil. I just think this is nonsense. As soon as the pandemic is overcome the same challenges will reemerge as before for our societies and the same paths to solutions will prevail. Indeed, initially there might be some reluctance to rent a car, to share a car or a bicycle or a scooter, to embark in means of public transportation, but this will vanish over time, even more so as the governments put in place consistent sanitary policies, starting from masks to prevent contagion, as it is customary in Asian countries with a traditionally high population density.
The fact is that since 2007 we have experienced many crises and disruptions of various nature or magnitude (the Lehman Brother collapse, Fukushima, dieselgate, COVID-19), all of them impacting to some extent the supply chains, the work organisation, the economic health of the businesses and the financial system. I anticipate that all companies of all sizes will look more and more for flexibility, enhancing the ongoing trend. Regarding car fleets, I anticipate that companies — and professionals and individuals — will be reluctant to be bound by long-term contracts and will favour mid-term contracts and/or contracts with flexible termination clauses. I think that the suppliers in the fleet and mobility sector will have to address this aspiration.
Needless to say that my real concern is about the shorter term and the economic impact of the crisis, in particular on the dealerships and workshops, on the supply side, and the SMEs and professionals, on the demand side. For the moment the keyword is solidarity. The strong have to support the weak. The banks, financial institutions, carmakers are already committed — financing stocks, postponing payments, etc... — but depending on the length of the crisis even the big might be under stress.
Regarding the renting sector in particular, I anticipate a wave — the magnitude of which is hard to predict — of requests for early termination or postponement or contract extensions in order to decrease rental rates. The good news is that nowadays digital practice is rife and also private lease has emerged: this may create a new outlet and ease the remarketing of the returned vehicle in the form of used car renting.
In a few weeks the will have overcome the pandemic and it will be time to reflect and draw lessons. Meanwhile I wish everyone of you the best for the weeks to come. Take care!
Philippe Bismut (former CEO of Arval)
With the Blog 'Spread the ideas, not the virus' we aim to support the fleet & mobility industry at times of the global spread of the coronavirus. We give the opportunity to our community to express their opinion, their ideas, their support in the format of a letter of max. 500 words to our community. It’s your personal insight to share with your peers and partners in the industry. Send your letter to Steven Schoefs,email@example.com