28 Nov 18

“Complex, but exciting times”

“For the fleet industry, these are complex, but exciting times”, said Steven Schoefs, Chief Editor of Fleet Europe, (pictured right) opening the Fleet Europe Forum in Barcelona. In three sessions this Wednesday, the Forum is exploring both the complexity and excitement – focusing on three hot topics: new finance models, fleet electrification and autonomous driving. 

First topic of the day: new finance models. Corporate fleet financing in Europe still mostly means operational or full-service leasing. No doubt it will remain important in the future, but new mobility models are also giving rise to a new financing environment, with more flexible financing solutions. Three experts shed their light on the phenomenon. 

Actionable insights

Frank Leveque, Partner and Business Unit Leader Mobility at Frost & Sullivan, offered actionable insights into the rise of new, flexible payment models, such as private lease, subscription-based models.

Everybody in the fleet industry is aware of the megatrends – long before they actually started influencing the industry, in fact. Which is… Just about now. 

“For many years, we’ve said: There must be a market for used-car leasing. It’s picking up now. Why? Not because of the demand – I think that was always there”, said Mr Leveque. “Rather, because we’re in a mature market, and we need to maximise the value creation of our assets. In short, because we need to do more with less”. 

Familiar buzzwords

Similarly, connectivity, MaaS and private lease are familiar buzzwords that now increasingly have real-world consequences. But: “Europe is lagging behind North America in private lease”, Mr Leveque noted.

The subscription model has a great future, as it fills a gap in the vehicle retailing formats, which typically cover days (rental) and years (leasing). Subscription could fill the need for vehicles on a month-to-month basis. And we’re already familiar with the formula: “Western Europeans already spend 10% of their disposable income on subscriptions, from utilities to Netflix and Spotify”. 

Rapid transformation

John Saffrett, COO of ALD, (pictured left) focused on the rapid transformation of mobility financing. ALD of course is one of the major international lease and business mobility players that is focusing strongly on new offerings in the corporate mobility arena.

He started by pointing out how societal megatrends are having very specific impacts on the fleet industry: the ownership to usership trend is transforming full-service leasing; the alternative powertrain trend is pushing EVs; the connected and digital trend is leading to a connected-car ecosystem; and the MaaS trend is generating a host of mobility services. 

That’s a lot to take in for fleet managers. Fortunately, “lease companies are well placed to support fleet managers on their journey – and I’m not just saying that because I work for one”.

Primary objective

One example: while MaaS has as its primary objective to make life simpler for end users, it actually makes the job of fleet managers more difficult. Lease companies can assist fleets on that journey: “I’m not here to defend full-service leasing to the death. We recognise the shift to MaaS is happening”. 

One tricky subject for fleet managers – and lease companies, and other players - is how limitatively to define mobility: does it include planes? Trains? “Everybody has a different answer”, says Saffrett.

While the end destination of the journey may still be unknown, the path forward is clear, though: “What are we seeing today? The car is still the centrepiece for fleets, and on top of that we are adding layers of flexibility. Full-service leasing, plus mobility cards, plus subscription, plus extra services”. 

“If you want to succeed, the main thing is to try it. That’s the first step towards adoption. And so we have to provide a great user experience. If a new solution is more difficult, it won’t work. If the app disappoints the first time, you’ll probably not ever use it again. That’s why we at ALD aim to remain at the forefront of innovation”.  

New adventure

Georg Bauer, Co-Founder and President of Fair, has a long track record in automotive and fleet financing. A few years ago, he started a whole new adventure with a start-up that delivers finance services adapted to the new mobility environment. 

“After working for OEMs for 40 years, I decided I wasn’t done yet, so I became part of an automotive start-up”. Why? The answer is quite simple: “The automotive industry was never boring, but it’s never been more exciting than it is today”.  

Fair (based in the U.S., - Ed.) has been around for about a year. It provides an app-based subscription model for used cars, which has proved very successful. Its principle can be summarised as follows: You get what you need, you pay for what you use, and you know what you pay.

Disruptive phase

The question Mr Bauer posed, was: Who will become the Netflix of the auto industry? “Modern consumers simply don’t want to get their car the old way”, he pointed out. That ‘old way’ is too time-consuming, not transparent enough, and imposes a commitment that is too long. Not to mention that 84% of consumers would rather not go to a dealership to shop for cars. 

As the online model in automotive is maturing beyond its disruptive phase, the question is: What next? In Mr Bauer’s opinion, we’re at the dawn of the Age of Subscription, a trend that dovetails perfectly with consumer likes and dislikes.

Authored by: Frank Jacobs