Changes Caused By Covid-19 on The Fleet Sector
The impact of Covid-19 has been widespread and has been particularly severe on the global automotive industry. Many manufacturer factories have been closed. UK dealers effectively closed temporarily and all automotive related suppliers required to adhere to social distancing measures. It has been and will continue to be a challenging period with big changes required for businesses to be able to continue their normal activities. The wider business community has also been hit with a prolonged recession forecast by most economic commentators.
The Impact of Covid-19 on Fleet
Many of the Covid-19 impacts are temporary and the industry will return to its’ previous position over time. However, the main consideration is what will the “new normal” be in the workplace and how will this impact the usage of company vehicles, and the types of vehicles required?
With flexible working being required where possible in the short term, how many of these policies will remain in place once the lockdown is relaxed? Flexible working may be the new normal or at least have a significantly bigger impact than pre-crisis. Policy areas this will influence will be the contracted mileage for vehicle leases (which will likely reduce) and also holding periods (lower mileage means the vehicle can be leased for longer without impacting operational use). The numbers of vehicles required may also reduce as employees and businesses see less of a requirement for the company vehicle.
Manufacturers and dealers will have some significant cash pressures and will look to increase sales as soon as possible. Expect to see some great deals on offer as the market emerges from lock down.
Pricing for company cars will also be impacted. Predicted downturns in the economy will likely have a negative effect on predicted second hand car values which could increase the lease price on some vehicles. This impact should be offset through additional discounts from the manufacturer but the impact will be different across different models but not in all cases. This means the volatility of pricing may impact the effectiveness of those policies operating fixed vehicle lists. Where possible, it is advisable to move to a flexible total cost of ownership (TCO) approach.
How fleets are operated will also need to change. The risks associated with operating vehicles are extended as a result of Covid19. There is an extensive list of advice provided by the government to address these risks and how to operate safely. The advice can be found here.
These do not just impact on company car users. Employees are likely to use their own vehicles more often in response to the challenges of traveling on public transport. This has broader implications for organisations as a whole so any specific Covid19 communications should cover all employees rather than just company vehicle users.