Fleet Market PESTEL
Fleet Market PESTEL (Political, Economic, Social, Technological, Legal and Environmental) analysis is a framework for businesses. This tool helps to identify the various external factors that might affect a business and specifically the running of the fleet. 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 – Pressure on government to upgrade infrastructure for both road and rail users due to increased congestion. The Prime Minister has confirm that the high speed rail link HS2 is proceeding as well as a host of additional infrastructure spending.
Brexit – Uncertainty around Brexit causing some major investments to be delayed or postponed. Funding for some EU owned fleet management companies now attracts a funding risk premium.
Trade – China, US and EU tariff discussions potentially have a significant impact on the cost of sourcing vehicles in different territories. The outcome of trade discussions will significantly impact where manufacturers will focus their resources over the medium term.
Political Leadership – New leadership of the Labour party and Liberal Democrat leadership to be decided. Brexit is likely to further the calls of the SNP for Scotland’s independence.
US Election – The US election will take place in November 2020. Any change of leadership is likely to have a significant impact on global politics and trade discussions.
Growth – The short term impact of Covid-19 on global economic growth has been significant. It remains to be seen what form any recovery will take and how quickly countries will return to normal.
Supply Chain – The impact of Covid-19 on global supply chains has been significant with items such as PPE becoming critical to the new normal. Supply concentration risk is likely to be addressed with many countries looking to bring manufacturing of products back to home shores.
Personal Tax – The increasing tax burden for company car drivers is leading to the increased attractiveness of the cash allowance alternative. Company car volumes are lower year-on year and the reduction of travel due to the Covid19 pandemic is likely to exacerbate this trend.
Personal Leasing – The Low interest rate environment is adding to the attraction of personal leasing through PCH and PCP. This segment of the market has seen significant growth in recent years and seems likely to continue.
Market Consolidation – Low interest rates leading to consolidation of fleet providers through attractive returns from asset backed funding. The market for leasing 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 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 and exiting unprofitable business such as the broker market.
Fuel Duty – The long running freeze on fuel duty helping with vehicle running costs.
Ownership Models – The ownership culture being challenged by Generation Y leading to reduced demand for passenger cars. Subscription services becoming a widely accepted usage model within a variety of settings. The increased prominence of Uber as well as platforms such as Zipcar and Lime is adding to the available mobility mix.
User Experience – Car drivers expecting the Amazon shopping experience. Tesla have led the way in creating new deployment models for the 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.
Fleet Electrification – New electric vehicle technology is paving the way for an fully electric future. This is having a big impact on infrastructure requirements at a local and national level with additional demands from the national electricity grid.
Autonomous Vehicles – Autonomous driving leading a number of manufacturers to re-think their product development strategy from products to services. 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 Tech – The age of mobile facilitates the rise of mobility alternatives such as Uber, Lyft and Zipcar.
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.
Digital – Increasing use of digitization 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 impacting on short term demand for vehicles due to the phased introduction and impact on personal tax.
EU Emissions Legislation – European legislation regarding new vehicle emissions forcing manufacturers to invest in using new technologies to reduce emissions.
Air Quality – Clean air zone (CAZ) legislation and legal challenges are enforcing action in many cities. Although some of the CAZ implementations have been delayed as a result of Covid19 there is still a 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. Pressure is likely to come to keep some of these gains as we move forward.
Climate Change – There is significant pressure on government to reduce carbon emissions of which road transport provides a significant proportion.
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.
If you would like to know more about the fleet market or a further explanation of the impacts of the PESTEL then please