Predictions for 2023 from our Journalists and Experts
Steven Schoefs - Editor-in-Chief
High time for sustainable procurement
In an uncertain environment it’s key to seek stability and mitigate risks. It’s logical that, in the first instance, fleet managers focus on business continuity and quick wins. But for 2023, it’s time to reflect fundamentally and properly prepare for the future. A future that can only be built on sustainable fleet procurement strategies, eying not only electrification but a complete carbon neutral supply chain based on sustainable and ethical partnerships.
And to manage your sustainable strategy you can’t do without connectivity. To me, connectivity will be the key driver for fleet management success in 2023. Because connectivity brings transparency. It will help in making the right decisions, mitigating risks and safeguarding your assets. And it will enhance your capability to innovate.
No wonder that Sustainable Procurement, with attention for the role of connectivity, is the main topic of the Global Fleet Conference 2023 from 15-17th May in Cascais, Portugal. See you there!
Alison Pittaway - Deputy Editor
Why we must learn to collaborate – and be brave enough to do it
That word: collaborate. It’s almost in danger of being overused in our industry but do we really know how to do it? We should. Why? Because it goes hand-in-hand with the other hackneyed word – data. Our industry is overflowing with data – lots of it. So much so, we call it Big Data. The number of points from which data can be collected have increased hugely, to the point at which the vehicle itself is a moving data collection device and in many respects it can even process, analyse and act upon that data to make driving safer and more economical. Heck, it can already make better decisions than a human driver - and we’re nowhere near level 5 autonomy yet!
Anyway, back to my point, which is that data means nothing unless you can do something with it. And that’s where the need for collaboration comes in. If you own the data, great but what are you going to do with it? Keep it in silos on servers somewhere? No, of course not. You’re going to use it to extrapolate value for your customers. But are you best placed to do that? Does it align with your core business? If the answer is no, which is likely in most cases, then you need to be brave enough to take the leap of faith and collaborate with partners who are best placed to sweat those data assets. Data is precious, we understand that, but it’s also dumb and valueless without someone who can make sense of it. Let’s make collaboration our buzzword for 2023 to get the most out of fleet data.
Frank Jacobs – Senior Journalist
The main question is vehicle supply. And nobody has the answer
The company car remains the cornerstone of corporate mobility. Which makes new-vehicle supply problems the number one issue in the industry. This past year, those problems have affected just about every aspect of the ecosystem. Delays have forced fleets to seek extensions and find alternatives. They have also driven up demand – and prices – on the used-car market.
You could say new-car shortages are yet another problem forcing the fleet and mobility industry to be creative. But there is a limit to what a lack of product will allow you to come up with. We’re told things will get better in 2023. In truth, nobody knows for sure. If they don’t, we’ll have to move from temporary fixes to a more permanent reconfiguration of corporate mobility.
Jonathan Manning – Senior Journalist
2023: the race to sustainability will accelerate
Thoughtful delegates to the Fleet Europe Summit must have noticed the difference in attitude and action between fleets at the conference and governments at COP27. In Dublin, businesses reaffirmed their commitment to cut the CO2 from fleet and mobility by as much as possible as quickly as possible, whereas in Egypt powerful voices seemed to advocate doing as little as possible as late as possible. If only fleet decision makers ruled the world!
Sustainability is firmly embedded in fleet agendas by both desire and necessity. Companies want to be responsible environmental citizens; and their customers as well as city and national authorities are demanding that they do the right thing. So, expect sustainability to be at the heart of tenders and contracts and company car and van policies this year. Fleets are moving faster than policy makers, and their pace of change is accelerating.
Müfit Yilmaz Gokmen – Journalist Contributor
Data will shake off traditional fleet strategies in 2023
2022 has been a testimony to the increasing challenges and the changing dynamics of the fleet industry. Traditional thinking has lost its footing in the industry along with conventional technologies. Keeping up with the innovations will be essential in 2023 as connectivity and advanced technology are evolving in the industry. Video telematics will continue to grow as smart cameras which can detect movement while turned on and off significantly contributes to the monitoring and safety of vehicles and drivers. Adaptation of fleet management software (FMSs) will grow too, equipping fleet managers with remote control and monitoring abilities. Data analytics will be another rising trend in 2023, feeding the FMSs and dashboards with intelligent data. One other vital trend to remark on is privacy, as the importance of removing personal information from vehicles with hardware and software will be an obligation under specific regulations.
Yves Helven – Expert Fleet Management
Commoditisation of ordering
Facing constant price surges, many companies have already reviewed their budgets and made the transition from ‘lease’ to ‘TCO’, which, in combination with electrification allows for the benefits of deductibility and recoverability.
Another trend is the transition from individual ordering to batch ordering. Fleet Managers have learned to anticipate on long delivery lead times and have started grouping their renewals into ‘batches’ as opposed to ordering vehicles one-by-one. In addition to the lead time argument, there’s an aspiration to motivate leasing companies and OEMs and obtain better pricing or discounts.
To enable batch ordering, the Fleet Manager is slowly moving away from budgets to car lists – in other words, the first steps toward commoditisation are being made. An interesting question: will leasing companies finally enable their APIs and connect with Ariba or Coup?
Piet Andries – Journalist Contributor
Last call for PHEVs in 2023?
As a transitional driveline technology, plug-in hybrid vehicles do make sense and vow for encouraging consumption averages, if driver discipline takes care of daily charging. The latter still proves a barrier, which is difficult to topple. However, some companies are turning to wage penalties if people refrain from plugging in. Undoubtedly, 2023 will prove the pivotal year for PHEVs with OEMs cutting back on the technology and subsidies in all major European countries and this may dry up and worsening TCO. The compass for Fleet managers will point to the battery powered choice more than ever. Dragging into its third year, the improving chip supply shortage might face a completely new threat. As geopolitical tensions with the US increase, China’s leaders haven’t succumbed from targeting an oppressive foothold in the world’s chip hub, Taiwan. No Chip Act from the EU, nor the US, arrived soon enough to build up a correspondent industry to compensate for that.
Saskia Harreman – Mobility Expert
These are disruptive times in corporate mobility
In view of the escalating environmental concerns, the soaring prices and the painstakingly slow easing of supply chain disruption, a growing number of companies will seize the moment in 2023 and reflect on their corporate mobility needs – not only for those employees entitled to a company car, but for the entire workforce. This will result in a more holistic approach to corporate mobility. Therefore, in the coming year, we will see more collaboration, more pilots in innovative and alternative mobility and a steady rise in bicycles/e-bikes as a corporate mobility option.
In 2023 I expect to see a sharp uptick in partnerships in which local governments, universities, suppliers and corporates will proactively seek collaboration. Together, they will present a united front and speak with one voice to further enable and enhance innovative, shared and sustainable mobility. They will increasingly:
- Become a trusted resource for policymakers at a local level
- Raise awareness of the role of shared and sustainable mobility
- Advocate a multi-modal approach to mobility
- Drive regulations and policies that will support the uptake of intelligent and environmentally friendly mobility
Johan Verbois, Remarketing Expert
We must constantly transform in remarketing
Constant transformation is required in remarketing due to the increasing number of electrified vehicles coming into the remarketing process. There will be a further shift from physical to digital in B2C and increased adoption of AI in both remarketing processes and data driven sales and sourcing. One of the key threats lies in staying competitive in an unpredictable world. Competition diversifies enormously with pure online players alongside more traditional processes and the used car impact of agency contracts. Therefore, all players must adopt an agile and flexible approach and manage costs well. In addition, we may witness used car prices falling as supply issues ease.
Pascal Serres – Leasing & Mobility Expert, Latam Expert
In 2023, consolidation and inflation will be the names of the game
The major change in the mobility market landscape in 2023 will be the merger of LeasePlan and ALD. This will happen before mid-year and create the largest mobility operator in the world, with more than three million cars in portfolio.
The marriage of ALD and LeasePlan is the biggest, but by no means the only significant consolidation in the industry:
- The acquisition of LeasePlan USA by Wheels-Donlen will create the third major operator in North America (together with ARI and Element).
- In 2023, Localiza & Co will manage more than half a million cars in Brazil, following its recent merger with Unidas.
- In Europe, BNP Paribas is concentrating all its mobility business in a common offer, which will include Arval, Cetelem, Cardif, and BNP Paribas Real Estate.
- And last but not least in this short list of examples: Stellantis and Renault are reorganising their financing and mobility business, with an ambitious eye on the future.
Meanwhile, there is continued great appetite among investors to support mobility startups. This means that in a quickly changing market, a lot of resources continue to be available for providers great and small to adapt their offerings to become even more sustainable and secure.
But let’s not forget that inflation also has an impact in the industry. In 2022, for example, monthly lease rates have been increasing by two digits, essentially because of rising car prices (or at least lower discounts), and rising interest rates (even if those higher market rates have not yet been fully transmitted to the end customers).
In 2023, we can expect continued strong pressure on both car prices and lease rates. Hopefully, competition will further drive up residual values and at least partially compensate for the troubles suffered in particular by the rental car sector.
Lease companies have been raking in large profits throughout 2022 thanks to large profits remarketing their vehicles (the average profit per used lease car sold works out to around €3000). It is likely these lessors will compensate their rates by adjusting residual values, as it is likely that the used-car market will remain strong for at least a few more years.
In 2023, more than ever before, it will be essential to control cost. Market benchmarks and accurate data will be the most important tools to achieve this objective.
Images: Benjamin Brolet