Fleet Strategy allows our clients to focus on their core business.
Fleet strategy covers a number of inter-related areas such as company cars, commercial vehicles, HGV’s, hired vehicles, cash allowance drivers, grey fleet, motorbikes and material handling equipment.
The broad range of stakeholders with an input into the fleet strategy include representatives from Operations, Finance, HR, Procurement, Payroll and Health and Safety.
We appreciate that each business is unique and requires a fleet strategy to meet specific the needs of the organization. When it comes to fleet there is no one size fits all.
Working collaboratively with our customers, we gain an understanding of the business, challenging where appropriate and developing a realistic and deliverable strategy which has the flexibility to adapt as circumstances change.
The 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 in a cost effective manner?
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 purpose covering operational requirements as well as employee benefits?
6. How do I incorporate the external factors such as government policy, covid-19, IFRS16, brexit and changing social attitudes towards travel and transport emissions?
Fleet Strategy Review Process
Our Fleet Strategy Framework uses a robust three step methodology. The output is comprehensive and measurable against the business objectives.
Phase 1 | Diagnostic
The diagnostic starts with engaging all stakeholders who are impacted directly or indirectly by fleet operations. It is essential people buy-in to the fleet strategy process
We then create a financial and operational baseline with all current costs from the supply chain and a map of current operational processes.
Analyze existing processes and procurement to identify gaps in performance or opportunities for development to create 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 sign-off for the options and authorise the proposed strategy implementation.
Phase 2 | Change Management
Use a robust change management framework to plan out the fleet strategy delivery. Identify key stakeholders and ensure they have time to support the project at the right times.
Speak with the current supply base to let them know what the strategy is and identify how they are able to support the process.
Where gaps in supplier capabilities or delivery are identified, run the procurement process to identify alternative suppliers.
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
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 to the strategy.
Provide effective management information to stakeholders to keep them in the loop.
Why use us to create your Fleet Strategy?
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
Robust and proven consultancy process coupled with exceptional knowledge of the market means you get the right answers for your fleet.
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
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.
There is pressure on government to upgrade infrastructure for both road and rail users due to increased congestion. The Government have confirmed that the high speed rail link HS2 is proceeding as well as a host of additional infrastructure spending. Infrastructure spending will become increasingly important following the pandemic in order to support broader economic growth.
The government has also agreed to ban the sale of internal combustion engine vehicles by 2030. To achive this aim the number of charging points will need to be expanded to meet the new demand.
There is the uncertainty around Brexit which is causing some major investments to be delayed or postponed. Funding for some EU owned fleet management companies now attracts a funding risk premium. Electric vehicle supply may be restricted in the event of a “no deal” outcome due to how carbon reductions are accounted for within the EU.
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 impact where manufacturers will focus their resources over the medium term.
New leadership of the Labour party and Liberal Democrat leadership have recently been put into place. Brexit is likely to further the calls of the SNP for Scotland’s independence.
The results of the US election remain unconfirmed although it looks like a Biden win. It remains to be seen how the change of leadership is likely to have a significant impact on global politics and trade discussions. However, the experience of Biden would suggest the new administration will be more multilateral in approach albeit the America First approach is unlikely to completely disappear.
Growth Prospects After Covid-19
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. There are likely to be huge stimulus packages to kick start growth across the world to try and repair some of the damage inflicted by the pandemic. The vaccines announced by Pfizer and Moderna have offered hope to the markets but it remains to be seen how quickly these can be manufactured, mobilised and the population innoculated.
Supply Chain Changes
The impact of Covid-19 on global supply chains has been significant with items such as PPE becoming critical to the normal functioning of society. Supply concentration risk is likely to be addressed with many countries looking to bring manufacturing of products back to home shores. This could be a short term impact or could change the shape of some economies over the longer term.
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 as the tax take from company vehicles reduces. Similarly the exchequer will have reduced receipts from fuel duty as general travel has been reduced. Road pricing has been muted as a response to the tax being lost on fuel and vehicle excise duty.
The Low interest rate environment is adding to the attraction of 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 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 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 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. Relatively unprofitable business such as the broker market will be reviewed with a view to accessing customers directly.
The long running freeze on fuel duty helping with vehicle running costs but this will come under increased pressure as a result of the pandemic and increased penetration of electric and low emissions vehicles.
Asset 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.
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
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. Hydrogen is also being developed as an greener alternative to internal combustion powertrains.
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. Other fuel technologies such as Hydrogen are also being investigated but still remain in niche in the overall mix.
Autonomous driving technology is 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 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 huge array of other possibilities within the automotive sector.
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.
Digitization of User Experience
Increasing use of digitization of the company car experience is helping to reduce the cost to serve and maintain or enhance profitability.
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. Manufacturers face potentially huge fines for missing emissions targets.
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 legal requirement for them to be put in place
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.
There is significant pressure on government to reduce carbon emissions of which road transport provides a significant 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
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 | 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.
Rivalry Among Existing Competitors (Medium/High)
Fleet management services are commoditised and hard to differentiate overall proposition. Many providers utilise the same IT platforms as in-house systems can be cost prohibitive for all but the largest suppliers.
Many providers use the very similar second tier supply chains for in life services and have to use the same OEM and dealer networks. Manufacturer discounts are “owned” by the end customer rather than the lessor so sale of supplier is less of a competitive issue.
Pricing can vary according to different assumptions relating to forecast residual values and maintenance requirements.
Less competitive rivalry on specialist assets or more complex commercial vehicle requirements as many providers will cap their services at the light goods vehicle level.
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.
Bargaining Power Of Suppliers (Low/Medium)
Many suppliers offering similar services gives 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/Medium)
High capital requirements means banks, vehicle manufacturers and private equity are the main players.
Government legislation and FCA regulations can make compliance an onerous and costly activity.
Threat of Substitute Products and Services (Low/Medium)
Services such as Mobility as a Service (MaaS) may act as a long-term substitute for company vehicles.
Perk or status drivers are increasingly opting for the company car allowance rather than a company car due to the increased tax burden on company car drivers.
Public transport quality and interconnectedness improving alternative transport modes.
Working from home may become the new normal during and after the Covid-19 pandemic.
Younger generations adopting alternative transport modes as alternatives to the company vehicle.
Setting the right fleet 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 the wide range of internal viewpoints. However, creating the right strategy has a big impact on how the fleet operates, creating efficiencies and better driver experiences.
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