10 jan 22

Exclusive: how Microsoft's fleet is dealing with car supply shortages

The value of strong, long-term partnerships has come to the fore as fleet decision makers seek solutions to the shortage of new cars and long delivery times.

Almost all vehicle manufacturers have suffered lengthy delays in car production due to plant closures and a shortage of semi-conductors and other raw materials. This has led to a downgrading of non-essential equipment, and an extension to lead times of up to 12 months; in some instances, certain models have been withdrawn from sale.

Confronted by these challenges, fleets have had to review vehicle replacement cycles, extend lease contracts, and consider expanding the number of makes and models on their company car choice lists.

Microsoft, however, is pursuing a ‘business as usual’ approach as much as possible, prioritising the value of its partnerships with OEMs and anticipating the same in return. The technology giant maintained its fleet replacement schedule throughout the first wave of the pandemic, in a move widely appreciated by manufacturers. And when the supply-demand equation flipped, Michael Pohl, Senior HR Benefit Program Manager, Microsoft Fleet (pictured below), wrote to the seven OEMs that supply Microsoft’s 9,600-strong global fleet, outlining his expectations.

“I want proper, long-lasting partnerships and I have written to manufacturers explaining what this means to us and what we expect in return,” he said. “Even with the current shortage of new cars, we are not increasing the number of OEMs who supply us, because we believe we should stick with our partnerships. A partner is for good times and bad.”

The only exception to this procurement policy is a slight relaxation of rules to allow drivers to select a fully electric car from another manufacturer.

No contract extensions

In the face of what he forecasts will be a relatively short-term issue, Pohl is not looking to extend lease contracts as a matter of policy, although extensions to current end-of-contract vehicles are inevitable until replacements become available. This strategy is facilitated by the fact that excess mileage is rarely an issue, following national lockdowns.

Earlier orders

Microsoft drivers can now order their next car earlier – nine months before the renewal date in a bid to minimise the impact of longer lead times. However, switching drivers into hire cars while they wait for delivery of their new vehicles is not an option, with rental companies suffering the same supply shortages as other fleets.

Driver communication

The international crisis has occasionally forced Pohl into ‘triage’ decisions to prioritise job need over perk car drivers, while some new starters are being offered a cash allowance to cover their mobility needs until a company car becomes available.

“Our drivers understand that this is a global issue, and we are communicating regularly with them,” said Pohl.

Normality by Q3?

He anticipates that lead times and deliveries will start to return to some form of normality by the third quarter of this year, but genuine partnerships… they last forever.

Authored by: Jonathan Manning