The innovation potential that Europe should leverage
61% of the 2020 Global Fleet Survey participants define their scope as being “global”, which in almost all cases includes Europe, Latin America and APAC. Most fleet managers are part of Procurement, but an increasing number report to HR or operate in a dedicated Fleet and/or Mobility department. European fleet managers are more likely to be part of the HR department as the Old Continent tends to offer more benefit vehicles than the other regions. European fleet managers, not unlike their colleagues in other regions, need to book savings, although with a target of 7.7%, the demanded efforts are slightly lower than elsewhere (9.3% in North America and 10% in Latin America). However, European fleets being generally mature, the 7.7% is potentially more difficult to achieve than a higher percentage in another region.
Still, European fleet managers indicate that they are not changing their saving strategies. Most of them confirmed in the survey that savings need to come from OEMs, leasing providers, vehicle selection, fuel consumption and cost control. Nevertheless, vehicle (under)utilization is becoming a topic of conversation.
Read more in the 2020 edition of the Global Fleet Survey, which can be purchased by clicking on this link.
Europeans continue to prefer full-service leasing (85%), although outright purchase is becoming more popular (5% in 2020, just 2% in 2019). The impact of IFRS16 is extremely moderate and European Fleet Managers are not truly exploring any alternatives to operational lease.
The global company has in average 6.1 providers in Europe; 66% of respondents allow local heroes to be part of the supply chain. Dissatisfaction with the leasing vendors follow the results of 2019. The global alliances score a satisfaction rate of 3.4 on a scale of 1 to 5 (3.48 in 2019), whilst 50% of the survey participants confirm that they intend to change suppliers.
Diverse OEM landscape
Because of the European car-as-a-benefit schemes, EU policies tend to include more car brands than policies in other regions, regardless of fleet sizes. Unsurprisingly, Europeans prefer EU brands and select OEMs based on pricing, safety and emissions first. Larger fleets tend to pay more attention to global availability whilst smaller fleets are looking out for electric or alternative powertrains. Overall, fleet managers in Europe are satisfied; 95% of the respondents does not intend to change vendors. The end of the diesel engine has been dramatically foretold in the media and European fleet managers tend to concur. 80% of them expect a decrease of the diesel penetration (compared to just 54% in 2019) and consequently an increase of petrol (37%), hybrid (80%) and electric (83%).
CO2 emissions are significantly lower in Europe than in any other region (46% of European fleets are capped at 140g/km or lower) and Europeans intend to reduce emissions even further by 2025 (48% aiming to cap below 100g/km). Electrification remains a hot topic and aspirations are ambitious: fleet managers project a 32.9% penetration rate of EVs by 2025. Charging infrastructure is identified as being the main obstacle for EV strategies.
The future of corporate mobility is European. Except for carpooling (-15%), European fleet managers anticipate an increase of all mobility solutions. For the fleet manager the rationale behind corporate mobility is emission-related first, closely followed by the enhancement of employee benefits. The impact of HR trends (from rigid benefit strategies to flexible benefits) on the Fleet category is increasing year after year. Cost reduction was at the time of the survey launch (pre-corona) only the fifth most important reason to implement mobility and the reduction of fleet size the seventh.
Due to data privacy regulations, telematics remains a difficult topic for European fleet managers. Nevertheless, the adoption rate in Europe (41%) exceeds that in other regions (34% in North America, 31% in Latin America, 28% in Asia Pacific). It needs to be specified however that these percentages refer to the adoption of telematics, not the penetration.
In 2019, fleet managers were looking at OEMs and Leasing companies first to provide them with connectivity and telematics solutions. In the 2020 survey, the telematics specialists have climbed into first position, leaving leasing providers and OEMs in second and third place respectively.
Trends confirmed in the New Normal
The 2020 Global Fleet Survey confirms previous trends: mobility, electrification and tech are part of the European strategy, but are heavily conditioned by procurement strategies (savings and consolidation). Nonetheless, HR is making a (re)entry and the importance of total reward strategies is growing each year.
The corona pandemic will have an interesting impact on both tactical and strategic fleet decisions as it puts HR and procurement in a position of alignment. The increased cost-savings pressure exceeds what can be realized by traditional procurement strategies (discounts, volume agreements) whilst at the same time, HR needs to ensure business continuity and look at new solutions to improve employee well-being. Translated into fleet language, it potentially means that fleet sizes need to reduce and flexible mobility needs to become part of a total rewards strategy. All the ingredients for an important mobility uptake are present.