"Labour shortage will make company cars even more important"
It's been a record year for the True Fleet Market across Europe's Big Five countries (more on the figures here). We asked Dataforce analyst Richard Worrow (pictured) to delve a bit deeper into the reasons for growth in 2017, and offer a prediction for the evolution of the True Fleet market in the Big Five.
What's driving True Fleet growth in Europe's Big Five markets?
"Mainly economic growth and confidence, low unemployment and reasonable interest rates, which keep the economy moving in the right direction. But we also see fleet policies widening, in several ways: more employees are becoming eligible for company cars, and - in order to better respond to driver needs - more vehicle types are allowed".
"Of course, providing a company car as part of a salary package is a great way to attract and retain staff, and generally keep them happy. And this will become even more important in future when some industries will be faced with a shortage of labour, and consequently will have to deal with recruitment problems".
"Simultaneously, both leasing companies and OEMs are increasingly aware that the fleet market is operating on different principles than the retail market, and they are now offering packages that specifically combine various elements to provide solutions tailor-made to the corporate customer's needs".
What's in store for the True Fleet market in 2018?
"We should see some growth this year. There is still lots of growth potential for the Fleet market in most countries. And as mentioned, we see more tailor-made offerings from leasing companies and OEMs attracting customers towards True Fleet".
"The UK is the exception among the Big Five: they are experiencing a set of conditions which have caused a contraction of the market in 2017. Brexit nerves are playing a role, as is the recently-introduced VED tax hike, which may have caused some companies to wait a little longer before the next replacement cycle. Having said that, 2016 was a good year for the UK True Fleet market, and last year it was still bigger than for any single year from 2006 to 2014".
Let's talk powertrains. Will diesel slowly fade, or drop dramatically?
"Considering the widespread vilification of diesel, it's hard not to see its decline continue. But the current rate of decline may not be sustainable: not just because that would require a higher production rate of petrol engines to fulfil market needs, but also because, for economic reasons, diesel is likely to remain the fuel type of choice for longer-distance drivers".
"However, as governments change vehicle taxation and push for cleaner air, it seems that diesel will carry most of the burden, those economic advantages for diesel are under threat. Another change factor may well be the OEMs themselves. Skoda recently announced it would drop diesel engines for the Fabia. We could soon see diesel start to disappear from the small-car segment, with the Private market likely to lead the decline".
So, will petrol be king, or will electric break through?
"In Denmark, Poland and Norway - to name but a few countries - petrol already has a larger market share than diesel. However, alternative fuels are currently number one in Norway, and it would not surprise us to see a few more countries achieve the same milestone in 2018".
"As more and more offerings enter the market, alternative powertrains will continue to gather speed in 2018. In some countries, we've seen volumes double. Excluding Norway, that still does not add up to significant volumes in most countries".
"Full-electric still has a few more hurdles to overcome before it really starts to make headway. Most notably: more infrastructure and more government support are needed. As technology keeps improving at rapid pace, EV range, charging speed and affordability are increasingly less of an issue. The Tesla Model 3 is likely to be a big game-changer, once it achieves volume production. However, one major downside of the fast pace of technological innovation is that it is very difficult to accurately predict the residual values of electric cars".