How to build a star fleet for your business

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Fleet

Cost management, safety and carbon reduction will be key goals for fleet managers in the year ahead, with ‘connected vehicles’ and eye-catching new models helping them to achieve those aims, say experts

Optimism prevails in most discussions about the state of the fleet sector in Britain. But, say the experts, while the consensus might be that the darkest days of recession are gone, any business operating company cars or vans needs to remain vigilant regarding cost management, carbon emissions and legislative changes.

Furthermore, the importance of sourcing the right fleet of vehicles – whether leased, rented or purchased outright – under an appropriate contract for their needs remains imperative.

Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), which represents the interests of the £20bn sector nationally, describes the state of the market: “The industry performed well in 2013, with an increase in fleet sizes across nearly all sectors. A growing economy, rising confidence levels and a strong new and used car market point to a promising year ahead – but there will still be major challenges to overcome.”

The past year has also witnessed important changes for businesses with fleets. Chief among these were legislation requiring publicly listed companies to report their carbon dioxide emissions for the first time and the requirement of Vehicle Certification Agency (VCA) approval for certain van modifications.

Demanding times
GE Capital – one of the world’s largest suppliers of vehicle leasing and fleet management services – surveys 250 senior industry professionals on a quarterly basis to assess what is happening within the fleet sector. Its first survey of 2014 found that running costs, safety and fuel prices are the three main concerns for company directors – followed closely by taxation and their vehicles’ environmental impact.

When those professionals were asked how they see demand for company cars changing over the next year, 30 per cent said they expected the size of their fleet to increase while 60 per cent said it would be unchanged – the remaining 10 per cent stated that the size would decrease.

Gary Killeen, fleet services commercial leader at GE Capital UK, explains: “The 30 per cent predicted growth for company cars is among the highest response that we have recorded in more than four years and underlines that there is a growing level of general economic confidence.

“However, it is important not to overstate this trend. More than half of fleets foresee no change while one in 10 believes that there will be a reduction in fleet size. Any recovery that is under way is likely to be very patchy and growth is likely to be erratic, too. Running costs, fuel, safety, taxation and the environment also dominate the results.

The businesses with which we work nearly always tend to view these areas as directly linked – a fleet that minimises its carbon footprint also minimises its fuel usage, reduces its tax liability and cuts costs.”

Indeed, carbon dioxide emissions have constantly become more important in the world of fleet in recent years and new capital allowances are incentivising vehicles with lower CO2 emissions. Neil Cunningham, general manager (UK and Europe off airport) of car hire giant Hertz, says that “technological developments” are a major way that fleet operators are looking to achieve these CO2 reductions.

He says: “With rising fuel costs combined with the added costs of servicing, road tax and insurance, it’s more important than ever for companies to manage commercial fleets effectively. And it isn’t just costs that are restricting fleet managers’ options. We’re witnessing environmental factors increasingly driving decision-making as businesses strive to meet sustainable standards.

“But new technology is transforming the fleet industry by reducing costs and vehicle emissions, while streamlining the experience for drivers. For example, by using our eileo technology and a global positioning system (GPS) to track vehicle journeys, fleet managers can access real-time information on where vehicles are, and where they are needed. Secondly, radio-frequency identification (RFID) technology allows fleet managers to track driver behaviour. The ability to spot non-efficient driving patterns can make a big difference when it comes to cutting back on fuel consumption and reducing overall fleet management costs.”

Cunningham pinpoints other “eco-friendly technologies” – such as start/stop systems that help drivers cut emissions when in stationary traffic and gear shift indicators which prompt them about the best time to change gear – as helping to reduce emissions.

Eliminating risk
Adrian Bewley, director of business rental (UK and Ireland) at Enterprise Rent-A-Car, observes that many companies the firm works with are citing the importance of managing “risk” as a priority. He says: “These companies are primarily concerned about managing their reputation by ensuring that employees are in appropriate vehicles while meeting their duty-of-care responsibilities. It’s my impression that these concerns have risen to the top of boardroom agendas now.”

Roddy Graham, chairman of the Institute of Car Fleet Management (ICFM), has identified an ongoing trend for companies to seek strategic partners that can provide guidance on reducing costs and ensuring fleet policies “meet their objectives”.

“Cost-management has remained at the forefront of our members’ minds over the past year,” he says. “And I think that many management companies operating in this sector are increasingly taking on the role of compensation and benefits consultants. We’re being asked to talk about improving tax efficiencies. As a rule, companies have struggled to provide staff with a pay increase over the past few years but offering them a car can be a perk that’s cost-neutral to them.”

He highlights the popularity of salary-sacrifice schemes that enable employees to relinquish part of their wage in return for a leased car.

The schemes can bring a range of cost savings and tax efficiencies for employers while simultaneously ensuring both duty-of-care and reduced carbon emissions as a result of employees driving new vehicles.

Flexible fleets
In addition to salary-sacrifice schemes, the BVRLA expects new business in 2014 to be driven by SMEs as well as the growing popularity of competitive, manufacturer-funded personal contract hire. The gradual trend away from pay-to-own towards pay-to-use road transport is also expected to gain momentum – particularly among those companies operating in urban areas. Such schemes are run by rental and leasing firms as well as by manufacturers.

The BVRLA’s Keaney adds: “New car club, car sharing and peer-to-peer car rental business models will continue to appear, while smartphone-based technology will make it easier than ever to book, use and pay for vehicles on demand. More fleets will embrace these business models when making transport plans as they look to tackle the cost and duty-of-care issues surrounding those drivers who use their own cars – known as grey fleet.”

Hertz’s Cunningham agrees with this sentiment, adding: “Car share solutions will continue to be popular as fleet managers seek round-the-clock access to vehicles. Online live-time booking systems mean that fleets can be managed more efficiently than ever, with little or no surplus, saving financial investment and helping to reduce emissions.”

Fleets of all sizes should benefit from administrative cost savings in 2014 as the Driver and Vehicle Licensing Agency (DVLA) centralises its services, moves them online to a dedicated fleet portal and abolishes the tax disc. These changes will, however, need new ways of working. By 2015, companies will be able to request electronic vehicle registration documents when they need them, removing the burden of needing to store paper copies, saving an estimated £3m per year and affecting over two million fleet vehicles.

And the DVLA has committed to abolishing the tax disc by October, which could save companies operating fleets a further £3.5m per year in administration costs. Finally, it has promised to abolish the paper counterpart of the driving licence over the next financial year.

Keaney adds: “Being able to request vehicle registration documents on demand from the DVLA will reduce costs on fleet owners who currently have to store and retrieve millions of documents each year. Notifying the DVLA electronically of a change of keeper will also remove a huge burden. However, the industry needs an online replacement for the driving licence paper counterpart that is cost-effective and provides real-time, 24/7 access. We’ve been working with the government to cut red tape, reduce costs and improve efficiencies. These developments will benefit the sector for years to come.”

For more information visit

www.dft.gov.uk/vca

www.bvrla.co.uk

www.icfm.com 

www.gov.uk/dvla

 

In focus: Maserati’s new Ghibli

Luxury brand Maserati has started targeting increased sales within the company car sector for the first time. The Italian manufacturer – which is also celebrating its centenary this year – launched its new Ghibli in February. Priced from £48,830, it represents Maserati’s most affordable range yet and is expected to form an important part of its strategy to increase global sales to 50,000 over the next two years.

Furthermore, the company has also launched its first-ever diesel engine, which is predicted to have greatest appeal to corporate drivers. The V6 turbodiesel Ghibli has the potential to achieve 47.1mpg combined at 158g/km CO2. It can also accelerate from 0 to 62mph in 6.3 seconds.

Peter Denton, north Europe region manager for Maserati, says: “We envisage that corporate sales will support 30 per cent of Ghibli sales in 2014. But we also anticipate that this will grow as our communication across this sector develops. The first signs about the success of the new V6 turbodiesel Ghibli in the corporate sector are particularly encouraging. We have seen the development of 130 orders from the corporate sector in the first month.”

The new V6 turbodiesel Ghibli is also the first Maserati to use start-stop technology, switching the engine off when the car comes to a stop and turning on almost instantly when the brake pedal is released. The manufacturer claims this system can lower the fuel consumption and CO? emissions by up to six per cent.

When asked whether Maserati is proactively targeting the company car sector as part of its growth plans, Denton replies: “We have created a new position within Maserati GB for just this purpose – Graeme Jenkins has joined us as corporate sales manager. He joined the company last August and has spent his time developing links with the contract hire and leasing industry, ensuring that maintenance costs and residual values are identified and understood. We’re also ensuring that the correct corporate channels are put in place to make the purchase of a Maserati through these channels as easy as possible.”

www.maserati.co.uk

 

 

Fully ‘connected’ cars on the way

Connected company cars are about to take the world of mobile working to a new level. Car manufacturers and software companies are now working together to ensure that drivers can get what they’re looking for without disrupting their focus on the road. Earlier this year, Audi, GM, Honda and Hyundai were among manufacturers that joined with tech giants Google and NVIDIA to form the Open Automotive Alliance (OAA). The alliance is committed to bringing the Android platform to cars by the end of the year.

“Millions of people are already familiar with Android and use it every day,” says Sundar Pichai, senior vice-president of Android, Chrome and Apps at Google. “The expansion of the Android platform into automotive will allow our industry partners to more easily integrate mobile technology into cars, and offer drivers a seamless experience so they can focus on the road.”

From a fleet perspective, the usefulness of connected cars lies in the ability to collect information about their own operation and then make that data available for management use. For example, a connected car could report on its own fuel consumption performance in all kinds of different driving conditions and measure this against what could be achieved with a slightly different – or “idealised” – driving style.

These cars have the potential to diagnose and report their own faults, even booking themselves into a dealership for a repair to be carried out after checking the driver’s diary. “The potential of these forthcoming models is enormous,” says Ashley Sowerby, managing director of fleet software company Chevin Fleet Solutions.

But Sowerby is among those who have expressed concern that the information made available by these connected vehicles will not be standardised. He explains: “This information is much more useful if it can be easily imported into a tool, such as fleet management software, that allows the data to be interrogated for useful patterns and trends, or compiled into a report that is easily understood.”

Chevin proposes a “single data format” covering the kinds of information which connected cars are likely to report to fleets. Sowerby adds: “It should not need to cover every kind of operation that a connected car would undertake but could cover speed, position, fuel consumption, key mechanical components and more. It would allow fleets to more easily make use of the data that is becoming available to them from connected cars to make efficiency gains.”

www.openautoalliance.net

About author

Ben Rooth

Ben Rooth

Ben Rooth is an award-winning freelance business journalist who has interviewed everyone from Prime Ministers to the chief executives of FTSE 100 listed companies. Over the past 20 years, he’s filed stories from destinations as diverse as Kabul, in Afghanistan, and Palm Springs, in America.

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