How to maintain business continuity and future-proof your fleet
In the face of unprecedented challenges, fleet decision makers need to stay flexible and open-minded about the solutions to keep staff mobile, according to the heads of Europe’s largest vehicle leasing companies.
Speaking to delegates at the 2022 Fleet Europe Summit in Dublin, they said that with fleets impacted in quick succession by Covid-19, vehicle shortages and delays, price inflation and soaring energy costs, the answer is to stay calm, not panic, and deploy short and long-term strategies to navigate through the current crisis.
Short-term tactical solutions include planning fleet renewals six to nine months before vehicles come to the end of their contracts, and to re-investigate the required terms of leases, with the potential to cut costs by reducing contract mileages in light of the fewer journeys employees are making post-Covid, said Annie Pin, COO, ALD Automotive (pictured above).
She added that today’s challenges also provide an opportunity to cement environmental advances by introducing CO2 or fuel consumption thresholds on vehicle choices, while adopting constant TCO monitoring to take account of rapid and significant changes in the price of vehicles, the cost of borrowing and expenditure on fuel or electricity.
Green momentum is essential
Yet even in the face of these headwinds, fleets must not flinch from their ESG commitments to reduce their CO2 emissions, said John Saffrett, Deputy CEO, ALD Automotive.
“These are the most important commitments we have as businesses and as an industry,” he said.
Fortunately, the TCO pendulum between ICE and electric vehicles has swung in favour of EVs, with ALD forecasting that over a typical four-year, 120,000km lease contract a C segment electric car would be cheaper in 10 of 12 European markets – ICE is cheaper only in Spain and Portugal.
Work with new OEMs
The difficulty for many large fleets is no longer deciding whether to electrify, but sourcing sufficient battery-powered vehicles once they have made this decision. Given the supply constraints on new vehicle deliveries, fleets should be open minded about working with new manufacturers, said Bart Beckers, CCO and Deputy CEO, Arval.
“Look for new OEMs keen to do business at the right price, especially with EVs,” he said.
This is exactly what rental giant Sixt has done as it aims to electrify between 70% and 90% of its fleet by 2028, said Vinzenz Pflanz, Chief Business Officer, Sixt (pictured above).
“We have bought 100,000 BYDs, because it’s almost impossible to get that volume of EVs in this time frame. If you really want to push your electric strategy in terms of getting a sustainable product, you need to go down new routes,” he said.
Second life leases
Berno Kleinherenbrink, CCO LeasePlan, urged fleets to review their car policies and take advantage of all the options available to overcome supply delays, including second life leases.
“There is also the option of used car leasing, with a very good opportunity to take advantage of cars that we have available at the end of contracts,” he said. “We have seen in various markets that if you make these cars available in the right way, that is a really attractive alternative to a new car, even with big corporates. It can be part of your flexible fleet and also as an alternative to ordering a new car because it’s immediately available and typically at a decent lease price to help you with your total cost of ownership.”
This type of flexible thinking is appearing more and more with a new generation of fleet decision makers, said Markus Deusing, CEO, Alphabet International.
“This new generation expects more flexibility,” he said. “We all have Netflix and Spotify at home and we all expect more flexibility and we’re not looking at four- or five-year leasing contracts any more. Will this transformation accelerate in the next 18 to 24 months? That’s the big question.”
“We see corporate mobility solutions really increasing,” said Christian Schüler, CEO Athlon. “Recently, we had one large customer on board who wanted part of the contract on lease and part on flex. There is a need for flexibility overall and we are really advancing with that. Discussions with customers show that it’s about working on this together and with partners – no one can win this race on their own.”
Yet being a sole supplier is exactly what Drivalia, the new mobility operation launched by FCA Bank’s Leasys and due to be owned by Crédit Agricole from next March, aims to provide, said Giacomo Carelli, CEO, FCA Bank and chairman of Drivalia (pictured above).
“What we feel is missing in the market at the moment is someone able to provide the full spectrum of products. When you talk to a partner they tell you they need a car for three months, they want a subscription for their managers and employees; it’s not just contract hire, but can you do corporate car sharing, can you offer ride hailing? What is missing today is somebody able to deliver a 360-degree mobility solution,” he said.
This will require major suppliers to merge their own fleets, breaking down silos so one enormous pool of vehicles becomes available to serve rental, subscription and leasing demand, said Carelli.
Pace of change
If there is consensus on flexibility being a vital element of future products and services, there is still a question mark over the timing.
“We all think flexibility will be here quicker than it will, but when it does arrive demand will explode,” said John Saffrett.
“One of the reasons we acquired Fleetpool last year is because it’s Europe’s largest digital car subscription company was to acquire that knowledge and understanding better. We had done some tests around that and you need new digital marketing capabilities, the ability to run short-term contracts, a very good logistics capability to deliver very quickly, and we wanted to learn. There has been some fantastic learning from that platform.”
This makes it essential that fleets that are laying the foundations of a more flexible fleet and mobility policy put in place the tools: “To record and report the emissions of your alternative mobility,” added Saffrett.