Fleet Strategy

Developing a clear Fleet Strategy allows our clients to focus on their core business

Fleet strategy covers several inter-related areas with a broad range of stakeholders, including representatives from Operations, Finance, HR, Procurement, Payroll and Health and Safety. Each business is unique and requires a fleet strategy to meet the organisation’s specific needs, and no one size fits all.

Working collaboratively with our customers, we understand the business, challenge where appropriate, and develop realistic and deliverable strategies that flex as circumstances change. The fleet management strategy process starts with getting a thorough understanding of our clients business by asking questions such as:

1. What is the purpose of the fleet, and how does it align to the overall business objectives both now and in the future?

2. How to operate the fleet effectively and safely?

3. How do I fund the fleet and operate it cost-effectively?

4. What are the risks associated with the fleet, and how do I effectively control them?

5. How do I ensure the fleet is fit for covering operational requirements and employee benefits?

6. How do I incorporate ESG requirements?

Fleet Strategy Review Process

Our Fleet Strategy Framework uses a robust three-step methodology. Therefore, the output is comprehensive and measurable against the business objectives.

Phase 1 | Diagnostic

Diagnosis Phase
  • The diagnostic starts with engaging all stakeholders who are impacted directly or indirectly by fleet operations. It is important people buy into the process.
  • We then create a fleet baseline with all current costs and a map of current operational processes.
  • Analyse existing processes and supply chain to identify gaps in performance or opportunities for development or efficiency.
  • Review overall business strategy and align how this will impact the fleet in the short, medium and long term.
  • Review current costs, supply chain contracts and supplier performance measures.
  • Develop options for change reflecting the internal and external environments. Obtain senior management approval for the proposed strategy implementation.

Phase 2 | Change Management

Implement Fleet Strategy
  • Identify key stakeholders and ensure they have time to support the project at the correct times.
  • Speak with current suppliers communicating the strategy and identify how and when they can support the process.
  • Run a procurement process to identify alternative suppliers where gaps in capabilities are identified.
  • Communicate progress to stakeholders during the change, highlighting when the changes will impact different groups.
  • Implement process efficiencies through the new or existing supply chain to support the strategy.

Phase 3 | Ongoing Fleet Management

Fleet Strategy Management
  • Create a robust Supplier Management (SRM) process through effective KPI’s and SLA’s.
  • Gather driver feedback through surveys and forum discussions.
  • Track the benefits of the new strategy against the expected forecast.
  • Benchmark policy, process and price to ensure these elements continue to align with the strategy.
  • Provide comprehensive management information to stakeholders.

Why use us to create your Fleet Strategy?

Fleet Management Experience

Fleet Experience

30+ years of fleet strategy consultancy experience covering every different type of fleet you can think of. From London Zoo to B&Q we have worked with them all.

Fleet Strategy Process

Comprehensive Process

Robust and proven consultancy process coupled with exceptional knowledge of the market means you get the right answers for your fleet.

Fleet Return on Investment

High Returns

We always deliver a high return on your investment improving the efficiency of your fleet operation keeping your drivers and management happy.

Fleet Strategy Toolkit

Fleet Market PESTEL | How macro-environmental factors impact your business

PESTEL (Political, Economic, Social, Technological, Legal and Environmental) analysis is a business framework. The tool helps identify the various external factors that might affect a business and, specifically, the fleet’s running. The goal is to figure out just how the different factors influence business performance.

We look at how this is currently positioned for the Fleet Management companies in the UK, although the implications have a similar impact elsewhere within Europe and beyond.

Infrastructure

There is pressure on the Government to upgrade infrastructure for road and rail users due to increased congestion. The Government has confirmed that the high-speed rail link HS2 is proceeding; although the Eastern leg, running from the Midlands up to Leeds has been scrapped. Instead, the Transport Secretary has said money is aside to upgrade the current transport in the area.

Infrastructure spending will become increasingly important following the pandemic to support broader economic growth.

The Government has also agreed to ban the sale of internal combustion engine vehicles by 2030. As a result, there will need to be an expansion of charging infrastructure to achieve this aim and meet demand.

Brexit

Brexit is now complete, and a trade deal in place but there is still uncertainty around both short and long term implications which is disrupting supply chains.

Negotiations are taking place for trade deals with various states in both the goods and services industry, which will influence future costs and product availability in some countries.

Trade

China, US, and EU tariff discussions potentially significantly impact the cost of sourcing vehicles in different territories. The outcome of trade discussions will impact where manufacturers will focus resources over the medium term.

US Election

The Biden adminstration appears to have a more traditional approach to the presidency compared to his predecessor. However, there is still a significant contingent of Trump supporterers who still maintain an ‘America First’ approach.

Growth Prospects After Covid-19

The short term impact of Covid-19 on the global economy has been significant. At the time of writing, European countries are beginning to relax restrictions and open up to travel due to the increasing vaccine rollout.

Supply Chain Changes

The impact of Covid-19 on global supply chains has been significant. Car production has been hugely affected by the semi-conductor shortage, which has had severe impacts on the technology industry as a whole.

Personal Tax

The increasing tax burden for company car drivers leads to the increased attractiveness of the cash allowance alternative. Company car volumes are lower year-on-year. The reduction of travel due to the Covid-19 pandemic is likely to exacerbate this trend as the tax from company vehicles reduces.

The exchequer will have lower receipts from fuel duty as there has been a reduction in general travel. There has been talk of road pricing due to the tax losses on fuel and vehicle excise duty.

Personal Leasing

The low interest rate environment adds to personal leasing through Personal Contract Hire (PCH) and Personal Contract Purchase (PCP). This segment of the market has seen significant growth in recent years and seems likely to continue. This will likely erode the potential demand from the traditional company car market as drivers opt for company car allowances instead.

Fleet Management Market Consolidation

Low interest rates lead to the consolidation of fleet providers through attractive returns from asset-backed funding. As a result, the leasing market is becoming more consolidated among the largest suppliers. Manufacturers are also expanding their footprint, as demonstrated through the acquisition of Inchcape by Toyota Financial Services.

Shrinking Overall Market

The reduced company run vehicle volumes are forcing Fleet Management companies to focus on profitability. This involves selling more additional value add services as part of a mobility mix. Fleet Management companies will review the relatively unprofitable businesses such as the broker market, with a view to accessing customers directly.

Fuel Duty

The long-running freeze on fuel duty helps with vehicle running costs, but this will come under increased pressure due to the pandemic and increasing penetration of electric and low emissions vehicles.

Asset Ownership Models

Generation Y are challenging the ownership culture, leading to a reduction in demand for passenger cars. Subscription services are becoming a widely accepted usage model within a variety of settings. The increased prominence of Uber and platforms such as Zipcar and Lime are adding to the available mobility mix.

User Experience

Car drivers expect the Amazon shopping experience. Tesla has led the way in creating new deployment models for sales and in-life user experiences.

Climate Change

There is an increased focus from many, especially the younger generations, regarding the environmental impact of travel. Innovations in electric vehicles offer a genuine low carbon alternative to fossil fuel vehicles. Other fuel sources such using Hydrogen as a greener alternative to internal combustion powertrains are also being developed.

Fleet Electrification

New electric vehicle technology is paving the way for a fully electric future. Infrastructure requirements at a local and national level will place additional demands on the national electricity grid. Other fuel technologies such as Hydrogen are also being investigated but remain a niche in the overall mix.

Autonomous Vehicles

Autonomous driving technology is leading several manufacturers to rethink their product development strategy from products to services. However, there is still much work to be done before fully autonomous vehicles hit the roads, with legislation providing the biggest obstacle to deployment.

Mobile Phone Technology

The age of mobile apps facilitates the rise of mobility alternatives such as Uber, Lyft and Zipcar. The implementation of 5G will offer a vast array of other possibilities within the automotive sector.

Mobility Services

The increasing availability of open-source information is helping to increase interoperability between transport options into a mobility solution. In the medium term, this will reduce the need for company vehicles.

Digitisation of User Experience

Increasing use of digitisation of the company car experience is helping to reduce the cost to serve and maintain or enhance profitability.

Connected Car

Connected car technologies offer increased opportunities within the big data and artificial intelligence space. Many of these services are in their infancy but are growing rapidly.

Worldwide Harmonised Light Vehicle Test Procedure (WLTP)

WLTP legislation impacts short term demand for vehicles due to the phased introduction and impact on personal tax.

EU Emissions Legislation

European legislation regarding new vehicle emissions forces manufacturers to invest in using new technologies to reduce emissions. Manufacturers face potentially huge fines for missing emissions targets.

Air Quality

Clean air zone (CAZ) legislation and legal challenges are enforcing action in many cities. Despite the delay in some CAZ implementations because of Covid-19, there is still a legal requirement for them to be put in place.

Covid-19

Covid-19 had a significant impact on traffic in local environments lowering emissions and improving air quality. There is likely to be pressure from local residets to keep some of these gains as we move forward.

Global Warming

There is significant pressure on government to reduce carbon emissions of which road transport provides a considerable proportion. The UK has committed to stopping the sale of petrol and diesel vehicles by the end of 2030.

Clean Air Zones

Local air pollution forcing many local councils to think about introducing clean air zones to avoid significant penalties. To see the impact and breadth of the changes, follow this link: https://www.bvrla.co.uk/resource/CAZmap.html

Urban Environments

The pedestrianisation of inner cities is leading to alternative transport modes such as Santander Bikes in London and the rise of the e-scooter offering from Lime.

Fleet Industry | Porter’s Five Competitive Forces Analysis

The competitive forces analysis examines those factors which influence competition within a particular industry.

Our analysis covers the full-service fleet management industry.

Competition (Med/High)

Fleet management services are commoditised, and hard to differentiate the overall proposition. In addition, many providers utilising the same IT platforms as in-house systems can be cost-prohibitive for all but the largest suppliers.

Many providers use very similar second-tier supply chains for in life services and use the same OEM and dealer networks. In addition, manufacturer discounts are “owned” by the end customer rather than the lessor, so the sale of suppliers is less of a competitive issue.

Pricing can vary according to different assumptions relating to forecasting residual values and maintenance requirements.

There is less competitive rivalry on specialist assets or more complex commercial vehicle requirements as many providers will cap their services at the level of light goods.

Bargaining power of buyers (High)

Wide range of different suppliers and brokers offering vehicle finance and associated services.

Headline pricing is relatively transparent.

Relatively low switching costs, although these can be more significant where services are fully outsourced.

Limited competition for global suppliers

Bargaining power of suppliers (Low/Med)

Many suppliers offering similar services gives a limited chance for differentiation.

Digital enablement offering some opportunities to reduce customer services costs and improve service offerings.

Niche areas such as specialist vehicles or new services linked to mobility as a service (MaaS) offerings can offer advantages where customer requirements exist.

Threat of new entrants (Low/Med)

High capital requirements mean banks, vehicle manufacturers, and private equity are the main players.

Government legislation and FCA regulations can make compliance an onerous and costly activity.

Competitive market for skilled employees

High cost of obtaining new customers in a cost effective manner

Threat of substitute products & services (Low/Med)

Fleet management services are commoditised, and hard to differentiate the overall proposition. In addition, many providers utilising the same IT platforms as in-house systems can be cost-prohibitive for all but the largest suppliers.

Many providers use very similar second-tier supply chains for in life services and use the same OEM and dealer networks. In addition, manufacturer discounts are “owned” by the end customer rather than the lessor, so the sale of suppliers is less of a competitive issue.

Pricing can vary according to different assumptions relating to forecasting residual values and maintenance requirements.

There is less competitive rivalry on specialist assets or more complex commercial vehicle requirements as many providers will cap their services at the level of light goods.

Setting the right fleet management strategy can be a challenge for a lot of businesses we work with. Often, an independent viewpoint helps to provide direction and clarity through managing a wide range of internal perspectives.

Creating the right strategy significantly impacts how the fleet operates, creating efficiencies and better driver experiences.

If you need some help with your fleet management strategy, then please contact us.

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