There are dramatic differences between regional fleet markets around the globe. Yet, despite these differences, there are also many similarities. Many of the challenges facing fleet managers are identical to the challenges facing their counterparts managing fleets elsewhere in the world. Universal challenges include vehicle downsizing, fleet rightsizing, cost containment, sustainability initiatives, sole sourcing, fleet standardization, compliance with governmental regulations and taxation, the emergence of multicultural fleet teams, more international policies governing multinational fleets, and the entry of non-traditional OEM nameplates (such as Korean brands and forthcoming Chinese models) into the fleet market, etc. The following are examples of mega fleet trends that are universally experienced at every local level, which are, in reality, offshoots of much larger global trends.
1. Procurement Ascendency: Universally, cost containment is the No. 1 priority facing all fleet managers. One global megatrend is the shift in the type of decision makers influencing fleet policy and practice toward procurement. In the past, procurement would do its “sourcing task” and then step away from fleet. Now, procurement is staying involved with fleet after the contract process to ensure the company “gets what it bought” from its fleet OEMs and suppliers. Procurement’s involvement with fleet has grown deeper and its scope of responsibility has expanded.
2. Impact of Taxation, Legislative & Regulatory Issues: Around the world, there has been an escalation in the taxation of fleet assets, especially for European and South American fleet vehicles, which are already heavily taxed. There are already a multitude of taxes on European fleet vehicles, such as a value-added tax, vehicle excise duty tax, company car tax (benefit-in-kind), and other country-specific taxes. In South America, there are ever-changing, complex sets of regulations on vehicle taxation, presenting not only fiscal challenges, but also creating administrative issues.
3. Unpredictability of Fuel Price Volatility: Another universal fleet challenge is coping with the unpredictable and volatile cost of petroleum-based fuel prices, which often defies conventional wisdom, especially when attempting to budget for future expenditures. Currently, there is downward pressure on fuel prices due to global crude oil overcapacity. The recent drop in fuel prices has been as breathtaking as the earlier run-up in prices. If sustained, these reduced fuel prices will begin to make a dent in overall fleet fuel expenditures. However, there is the risk that lower prices may bring about driver complacency. A large part of fleet fuel expense is controlled by drivers. Many of the hard-won increases in fleet-wide fuel economy averages can be negated by drivers reverting to less fuel-efficient driving behaviors. There is also a temptation by some governments to take advantage of lower retail fuel prices to increase fuel taxes to generate revenues to offset persistent budget deficits. They reason adding taxes while pump prices are low would result in less consumer pushback.
4. Vehicle & Engine Downsizing and Extended Service Life: The ongoing fleet trend to downsize to smaller displacement engines is global, with it primarily occurring in Australia, Europe, and the U.S. This involves not only vehicle class size and engine displacement, but also rightsizing the overall fleet size. Higher fuel prices and fuel taxes have increased operating expenses. This is prompting fleets to specify smaller displacement engines. Ongoing refinements in engine technology now allows downsizing to a smaller engine without impacting the fleet application. In addition, vehicles are being kept in service longer due to increased vehicle quality.
5. More Diverse Vehicle Selectors: Offering multiple makes and models to drivers is relatively common among European corporate fleets. One of the many reasons for growing selector diversity is due to the fragmented fleet market shares as more OEMs compete for the same slice of fleet business.
6. Globalization of Shared Services: There is a trend to centralize shared fleet services among international business units to achieve greater consistency and value with core business processes on a global basis.
7. Fleet Data Consolidation: Analyzing “Big Data” to better understand the strategic side of fleet management to implement further cost savings and efficiencies, has gained increased urgency and focus at many multinational fleets, especially to unify and manage “data streams” from a multitude third-party vendors.
8. Company-Provided vs. Grey Car Fleet: Increased pressure on company car taxation, liability exposure, and inadequate administrative resources is prompting some companies to regularly review the viability of offering a company-provided car. In some markets, some employees, especially younger employees, consider having a company car as part of their compensation package as less important than 10-15 years ago and prefer a financial reimbursement.
9. Sustainability/Green Fleet Initiatives: Globally, there is an ongoing proliferation of corporate initiatives to reduce greenhouse gas emissions, with European fleets in the vanguard. European environmental regulations are migrating from CO2 reductions to reductions in aggregated emissions, which include not only CO2, but also NOx and particulates. Despite the high cost, many companies, in all global regions, remain fully committed to achieving self-imposed sustainability targets, especially multinational corporations. A large number of global fleets have established emissions baselines and developed selectors to select the right vehicles to reduce these baselines. Another corollary trend in sustainability deals with broader concept of mobility management, which would involve multi-modal transportation, with fleet managers ultimately evolving into “mobility managers” of the future. One aspect of mobility management would be the creation of a mobility budget to be used as a financial incentive to stimulate employees to travel in a more sustainable way. Europe is in the vanguard, with other markets lagging, since there must be viable alternatives to company-provided vehicles, such as a well-connected public transportation network seamlessly interconnected by corollary mobility solutions.
10. Standardized Safety Programs and Training: An increasingly more frequent request to suppliers from multinational fleets is for a standardized safety program everywhere they operate vehicles that are available in the local language with customization to local regulations and practice. Furthermore, multinational fleets want to collect motor vehicle records (MVR) or equivalent data in every country where it is available, to assess driver risk. Companies are also increasingly focusing on changing specific driving behaviors to improve fuel economy, reduce operating expenses, decrease GHG emissions, and promote safe driving.
In the Final Analysis
Fleet management, at its fundamental level, has more similarities than differences, regardless of the global market. Oftentimes, fleet best practices emerge from outside your local market, which is good reason for you to familiarize yourself with what’s occurring in other regional fleet markets.
Let me know what you think.
About the Author
Mike Antich is editor of Automotive Fleet magazine and conference chair of the Global Fleet Conference held in North America. Mike was inducted in the Fleet Hall of Fame in 2010. He can be reached via e-mail at mike.antich@bobit.com.
Other blogs by Mike Antich:
http://www.automotive-fleet.com/blog/market-trends.aspx
