The fleet market in Canada saw growth restored following the pandemic, with fleet sales up to 273,584 units.
While this was positive news, said Keith McLaughlin, a specialist fleet business publisher talking to the Global Fleet Advisory Board (GFAB) hosted by editor Mike Antich, it still only represented three quarters of the fleet market pre-pandemic.
Focusing on the Canadian Fleet Market, Keith said the significant upward shift had been in passenger cars rather than the dominant light truck market, which enjoyed 80% fleet market share. And gasoline ruled the road.
“Fleets have talked about electrification but numbers are still very low,” said Keith.
Basil Marcus, Managing Director of LeasePlan Canada and Foss National Leasing, added that while EVs were not prominent in the Canadian market yet, he was witnessing “a real hunger for knowledge” on EVs.
“Fleets are looking at electric vehicle RVs, the total cost of ownership and the sort of infrastructure that would be required to decarbonize. But there’s not a huge transition yet because of product availability issues.”
The fact that Canada is such a truck dependent fleet market also plays against electrification, although that will no doubt change once Ford’s all-electric F-150 Lightning hits the market along with Rivian’s R1T truck.
Keith explained that the fleet market was also highly regionalised. British Columbia and Alberta in the west were focused on extraction mining and agriculture, while Ontario - sitting above the Great Lakes - was the center for manufacturing with its own distinct requirements. Meanwhile the Quebec province on the east coast was not only dominated by a different language - French - but by the services sector.
Further differences included Western Canada’s preference for light trucks while British Columbia and and Federal Quebec had incentives in place for EVs.
In terms of funding, Keith told the GFAB audience that government fleets were purchased outright as were most small business fleet sales. Dealer fleet sales, meanwhile, were often open-ended leases while a closed lease was less popular. “Having said that, more fleets are considering closed leases because of the market uncertainty they are facing,” Keith added.
Difficulties Facing the Fleet Market
Despite the uptick in fleet sales, the Canadian fleet market was facing strong headwinds, said Keith.
“Product availability has been an issue accelerated by covid. As a result we’re seeing lifecycles extended, which means greater fleet preservation, plus difficulty getting parts and the follow on of longer downtime.”
Basil Marcus also added that his business had vans parked up because they could not source windscreen replacements. He also believed that vehicle constraints would continue into 2023 and quite possibly into 2024, partially due to the small scale of the Canadian fleet market. He also expected import transportation costs to further impact the market ahead.
With rising fuel prices, fleets were now also concerned about managing rising costs. Keith added: “It’s giving fleets ammunition to talk to boards about alternative vehicle choices, such as more compact vehicles or alternative fuels.”
Hamid Dean, facilities leader & fleet manager at 3M Canada, offered his view on the situation:
“This pandemic has forced us to reconsider our vehicle lifecycle. We were four years/120,000 km (75,000 miles). But now we’re understanding our footprint on the road, we’re holding onto vehicles and not allowing them to be bought by the driver but to keep them within the company. What’s more, the new vehicles we have been able to locate are coming back to us 40% more in terms of cost. It’s tough but we’re planning for longer cycles to mitigate some of this additional expense.”
There’s little recourse to the used market, either, since prices there have risen astronomically. Basil offers the example of a new car, cost C$50,000, rising to C$70,000 used within one year.
It all adds to a market currently starved of new product with fleets facing price rises and no discounts on the vehicles they can order, and additional SMR budgets for current fleet vehicles on lifecycle extension.
It’s a scenario that is common to European fleet managers but where Canada differs, says Keith, is in the fleet dominance of three brands: Ford, GM and Jeep (part of the Stellantis group).
Nevertheless, Basil said he could see a shift in the market ahead. More commercial vans would be required to meet the demands of the government’s economy stimulating infrastructure projects.
And he also expected to see a steady decarbonization process begin as Canada headed towards its 2035 net-zero emission grid.
In the meantime, fleet managers were focused on fleet preservation over extended running periods, and cost control policies over fuel and new vehicles, making the fleet manager’s task more complex and critical to business operations.