Global Fleet Management had the opportunity to talk to chair of the Association of Fleet Professionals (AFP), Paul Hollick, about the challenges that lay ahead for fleet managers in 2022.
Here’s Paul’s view on the forthcoming 12 months.
Post-covid Brings New Challenges
Just as companies were finally getting back to some form of normality at the end of 2021, along comes the Omicron variant of COVID-19 to disrupt working lives and patterns. Nevertheless, fleet drivers will return to work behind the wheel of their cars and vans in 2022, but Paul warns that getting back behind the wheel is not necessarily a simple matter.
“At the AFP, we’re seeing two areas of potential risk emerging. One is drivers who have worked in frontline services and industries such as parcel delivery, subsequently being placed under huge pressure during the pandemic. The other is people who have been furloughed or home working, and therefore covered many fewer miles in the last year than previously. Both groups represent risks and these employees may need proactive management in order to keep them and other road users safe. Linked areas of emerging concern for fleet managers include mental health issues and drug driving.”
As EVs Popularize, Charging Infrastructure Becomes Critical
Company car electrification now has massive momentum thanks to the low levels of driver taxation in the UK. Current run rate of EV registrations in the UK is 11% of the market according to the SMMT. While this decarbonization switch shows the speed at which fleets are changing policy, it does mean that, operationally, there are new challenges.
“By far the biggest of these is charging,” continues Paul. “Two issues need resolving. The first is providing infrastructure for those who live in an apartment or terraced house and require access to overnight, on-street charging. At present, this is almost non-existent and massive investment is needed as well as meaningful strategies at both local and national levels. The AFP has formed a new Kerbside Charging Group to help tackle this need. The second is to upgrade the public charging infrastructure, which is coming under considerable pressure because of the growth in EV company cars. Again, the only answer is for large sums of money to be made available.”
Reimbursement Rates for EV Usage
The associated rise in EVs on fleets also brings with it issues about equitably reimbursing employees who are charging their vehicles at home. Following Government lobbying, which included the AFP, fleets can now use an “actual cost” basis and secondly, the standard tax-free reimbursement rate has been increased from 4p per mile to 5p per mile.
“We very much welcome these changes but further work is needed. The new 5ppm rate works for smaller EVs but, once the range of a car gets up to around 250 miles, the charging cost per mile is higher and, ideally, we would like to see an AER of 6-7ppm for these. Also, many fleets have used the AER rate within their whole life cost calculations and if moving to an actual cost reimbursement model, this will need to be reflected back into vehicles available within particular grades.”
Growth in eLCVs
Following a year when electric cars looked to be firmly established on the fleet agenda, it appears that 2022 could be the turn of electric vans eLCVs to start playing a positive role in fleet policies.
“We are currently seeing operators starting to get to grips with the ways in which these vehicles can be used, given the new strategies that may be required to take account of range and payload,” says Paul, noting that eLCVs are finally becoming available in a much wider range of designs and payloads. For example, Vauxhall now offers a range of panel vans from small thru large, and is also planning to introduce a hydrogen van beginning 2023.
Mobility Policies Start to Re-emerge as Part of Fleet Policy
The idea of mobility policies was beginning to find a place at the table as corporate companies looked to new ways to reduce vehicle dependence and lower CO2 emissions. But that was prior to the pandemic. With the requirement for shared asset use, mobility solutions lost their allure. However, with a more mature market for such offerings as e-scooters, companies are beginning to reassess their mobility requirements, believes Paul.
“Many fleet managers expect that their professional future lies in evolving into a mobility equivalent and we are seeing strong demand across the AFP for advice, training and guidance in this area. In 2022, we expect this trend to gather pace, and for more and more organizations to adopt some form of formal mobility strategy. As a result, we believe a mobility allowance could gradually become the favored choice for those who might otherwise be considering a cash option, initially focused on those that do not wish to have a permanent car on their driveway.”
Semiconductor Issues Continue to Impact New Car and Van Deliveries
Whether you’re in the UK or mainland Europe, there’s little difference to the impact that the lack of chips - so integral to cars and vans (with up to 4000 per vehicle) - is having on new vehicle deliveries. Current estimates suggest that full production may not recommence until Q3 2022, “This issue is not going away quickly,” continues Paul, “with some manufacturers now quoting the end of 2022 for delivery on mainstream models. That means, of course, that the knock-on effects of long waiting lists will continue, including fleets hanging onto cars and vans for longer while they await delivery, placing additional demands on service and maintenance strategies, and values in the used vehicle market remaining buoyant because of poor stock supply.”
Stress on Short-term Vehicle Hire
Lack of new cars and vans is impacting the daily rental fleets, many of which understandably disposed of a large number of units during the pandemic and now find themselves searching round for vehicles. “This means that short term vehicle hire pricing is increasing and will probably continue to do so but also that we are hearing widespread reports of bookings simply not being fulfilled,” reckons Paul. “This is especially an issue for van users, with daily rental demand remaining high in the wake of the pandemic.”
City Center Traffic
Various Clean Air Zone projects and the extended London ULEZ came into effect right across England and Wales. There’s more to come in 2022. Scottish Low Emission Zone equivalents are slated to commence in Aberdeen, Dundee, Edinburgh and Glasgow while Manchester in England will start its own CAZ.
“Fleets have been managing the impact of all of these with minimum difficulty, generally moving low emission vehicles to cities with a CAZ. The key area of interest now is what will follow these low emissions initiatives? It is interesting to look at the plans announced recently in Birmingham to effectively route all road traffic onto the inner ring road by 2031, with the city center itself becoming effectively traffic free, except for public transport and micro mobility solutions such as e-scooters. It is difficult to imagine that other cities are not also considering similar strategies and this could have a significant effect on businesses that operate in major urban areas in the medium-long term.”
Company Car Numbers Begin to Grow
“At the AFP, we have been predicting for a little while that car fleet numbers will soon start to grow after successive falls in recent years. This may have been momentarily postponed by the pandemic but we believe that the tide is very much in the process of turning and we’ll see an electrified renaissance for fleets,” believes Paul.
There are many reasons for the uptake of electric vehicles - including Corporate and Social Responsibility and environmental pressures - but the key drivers are the low taxes on EVs. The benign taxation system is creating a high level of interest in those drivers who had opted out of a company car scheme for a cash equivalent but are seeking a return to the company provided car, as well creating momentum behind EV-based salary sacrifice schemes, to the benefit of most employees in an organization.
So that’s plenty on the agenda for fleet managers to consider and a number of issues to be circumnavigated during 2022 - but we’ll continue to keep you updated and informed here at Global Fleet Management, along with all the latest shared intelligence from the AFP.