15 jan 19

Nordic fleets “transitioning to electric” in 2019

What will 2019 bring for the fleet and lease industry in the Nordics? Many different things, says Frank Verver, General Manager for that region at Arval: “From the outside, Scandinavia is often seen as a single region, but in fact it’s four very different countries. Denmark, Sweden, Finland and Norway each have their own market specifics." 

Norway famously leads the world in electric mobility, Sweden uniquely has its own automotive industry with Volvo, Finland has strong expertise in MaaS and Denmark’s prohibitive vehicle tax favours cycling and other mobility alternatives.

Still, the region (pictured: Norway's Lofoten Islands) shares common traits – most of all the ambition to play a pioneering role in shaping the mobility of the future, albeit each country with its own specialisation. That, more than the region’s combined volume of business, makes the Nordics an interesting laboratory from the perspective of the automotive industry in general, and the fleet and lease industry in particular, especially for those who offer pan-Nordic solutions

Here is what the new year will bring for the Nordics:

Fleet Sales 
“Overall, fleet sales will remain stable for 2019,” Frank predicts. He points out a few key areas that are likely not only to influence overall sales, but even the type of cars sold.

“The arrival of WLTP impacts company car policies. However, as the adoption of WLTP is not clear for all countries yet, we expect that changes of CO2 limits will  be postponed. On top of this, Sweden introduced a bonus-malus system, based on the  CO2.”  

There will be a transition to PHEV and BEV in all countries, says Frank, “but as that decision is often driven by the Benefit-in-Kind principle and EVs don’t receive  tax benefits in all countries, growth of this segment will not be equally spectacular for all countries.”

EV adoption depends a lot on national fiscal policy: “When tax benefits exist, as in Norway, we see an immediate positive effect. Without such stimuli, TCO considerations still favour ICEs, and fleet managers choose these type of vehicles.”

Fleet Management 

TCO will be an even more decisive factor in selecting fleet cars than before, Frank predicts. “Yes, there are still some old selection habits based on investment or taxation value of vehicles. But most companies realise that a policy that reflects the true running cost of a car is a better fit for their mobility strategy. With fleet connectivity, a next chapter of fleet management is available with full transparency on cost.” 

“As the complexity of fleet management, administration and HR issues increases, we see the demand for outsourcing fleets growing. These needs are best fulfilled by specialists who have the required expertise." 

Frank also expects the level of products and services that fleet customers expect lease providers to integrate will increase: “They will request more integration of insurance solutions and any kind of relief vehicle, as well as increased flexibility of lease terms. Next to the traditional three- or four-year term, we’ll see an increasing demand for the provision of mid-term rental solutions, from one to 24 months.” 
Lease industry
“In Denmark and Finland, operational lease already takes up about 50% of business fleets,” says Mr Verver. “In Norway and especially Sweden this is lower. The expectation is that this will grow fast, by the transition from financial lease to operational lease.”

Private lease is also a growing trend all across the region. Until now, it’s been a niche market, mainly covered by OEMs. But the expectation is that multibrand lease providers will start taking market share from this year onward.

“Both fleet managers and drivers will have rapidly increasing access to digital and online solutions. The Nordics are already very familiar with such high-tech solutions in other domains, so the introduction of similar products by lease providers will be accepted easily.”

Authored by: Frank Jacobs