Analysis
14 May 20

What fleet scenario do you pursue in the New Normal?

Scenario planning is a business tool that let decision makers stress-test different strategies against different visions of the future. As fleet decision makers plan for the post-lockdown recovery and prepare for the New Normal, scenario planning offers an alternative way to test new strategies and ideas.

The uncertainty of business life in the New Normal creates a number of widely divergent scenarios for the future of Fleet. What is certain is that cost cutting will become the main priority of fleets. But what other priorities and targets do corporates have? Has the lockdown fundamentally changed the way people work and communicate, with video conferencing replacing the company car?  

Scenario planning is a tool that models and assesses every possible outcome over a long period of time to inform business and investment decisions. It does not predict the future, but instead creates a series of alternative ‘what if’ scenarios, often extreme, against which the impact of future plans can be measured. Its aim is to prepare the ground for policies that are more resilient.

As a business discipline, scenario planning avoids looking in the rearview mirror to determine the future. Otherwise, planners would have built more stables for horses, rather than plan for the motor car, or dug more canals rather than seize the opportunity of railways. Reactive policymaking is vulnerable to failure because it fails to take into account such unanticipated changes. Scenario planning offers a way to test strategies against a wide range of potential outcomes to spot potential weaknesses and identify more resilient and robust policies.

Scenario planning does not, however, provide concrete answers. Nor does it determine whether it is better to implement strategies that perform reasonably well in a wide variety of scenarios, or commit to a policy that performs exceptionally well in just one scenario.

Three scenarios
To help fleet decision makers stress-test future strategies, Fleet Europe has created three scenarios. Elements of all or none may actually happen, but answering the ‘what if’ questions will help to identify weaknesses in current planning and lead to stronger, more resilient policies.

SCENARIO 1 – The Green Scenario

Go green – companies emerge from coronavirus lockdown with a renewed commitment to environmental goals and find that access to financial support from the EU, national and local governments is closely linked to reducing carbon emissions.

  • Businesses start to ask how many professional business miles they really need.
  • Businesses downsize their fleet sizes, operating fewer vehicles and restricting them to essential journeys.
  • Businesses bring forward their carbon neutrality deadlines to 2025.
  • Grants and subsidies are only available for zero emission electric vehicles, leaving plug-in hybrids unsupported and expensive.
  • A massive Europe-wide expansion in renewable energy makes electricity a cheaper power source than petrol or diesel.
  • The low traffic volumes, cleaner air and reliable journey times during the COVID-19 lockdown encourage authorities to introduce tougher congestion charging and lower emission zones.
  • Employees have become used to cycling and walking to work during the lockdown, prompting authorities to prioritise road space for active travel.
  • More employees work from home, reducing the need for company cars.
  • Workplaces shrink, cutting the need for office EV charge points.
  • Employees expect multi-modal travel solutions for business trips.
  • Mobility as a Service becomes a key feature of emplyment contracts, palying an important role in staff recruitment and retention.

SCENARIO 2 – The Digital Scenario

Online society, online economy - the coronavirus lockdown prompts a fundamental shift in the way businesses and private individuals buy products and organise their corporate and personal life. Digital communication is all around. Shopping shifts online and delivery becomes central to the retail experience. 

  • Employees become more tech-savvy than they already were.
  • COVID-19 has forced fleet managers into a more pragmatic and decentralised fleet management with digital tools helping them to execute their role.
  • Retail space and location become less important than warehouse space and location.
  • Businesses need freight consolidation centres to gather packages prior to last mile delivery.
  • Logistics and delivery firms start to share warehouse and hub facilities.
  • Customers expect green delivery options, demanding bike and electric van deliveries.
  • Drone robots become a common sight on urban pavements.
  • On-demand mobility will grow as the need for professional miles will become more punctual rather than constant.
  • Punctual delivery times become a vital USP – customers expect to track deliveries minute-by-minute in real time.
  • Cities impose limits on how many deliveries each building can accept during the day.

SCENARIO 3 – The Cost Scenario

Cost cutting chaos – the economic impact of the coronavirus pandemic forces companies to adopt drastic cost-cutting measures.

  • Fleet renewal is suspended. Vehicle holding periods extend, contract mileages rise, service and maintenance challenges increase.
  • Non-essential vehicles are sold or used as pool cars because they are cost-effective. 
  • Perk company cars disappear from employment contracts.
  • Price becomes the most important factor in sourcing new vehicles, leading to a possible resurgence of diesel sales as oil prices remain low.
  • Fleets look to leverage their buying power through a single supplier – only a small number of OEMs have ranges capable of satisfying all fleet operational needs.
  • Long-term, fixed cost supply agreements become essential as fleets operate under strict budget controls during the corporate recovery. 
  • After the recovery fleet managers will question if non-flexible, long-term solutions are the right choice, as it’s the second time in just over a decade they are confronted with contract issues/extensions.
Authored by: Jonathan Manning
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