The most recent meeting of the Global Fleet Advisory Board (GFAB) looked at some of the issues affecting the European market.
Led by Hans Damen, a founding partner of fleet management company Fleet360, Hans wondered whether mobility solutions might be the answer for some employees as the OEMs looked to remove low cost cars from their inventory.
“OEMS are considering taking out small vehicles from their portfolio because the margins are slim and concentrating on larger vehicles where the profit margins are greater,” he said. “Mobility solutions may take over the need for low cost cars.”
Hans also said fleets were facing increased leasing costs - in the region of 10% - thanks to reduced incentives and greater manufacturing costs.
However, lower incentives were good for fleet reckoned Keith McLaughlin (CFO of Canadian Automotive Fleet). “With lower incentives fleets can move to better TCO rather than be swayed by ‘dollars on the hood’.”
Editor Mike Antich added that should there be a downturn in the industry, which affected retail demand, then OEMs might turn to incentives again to bolster fleet demand if faced with flagging retail.
Meanwhile Jim Petrillo (manager treasury services & fleet management at FujiFilm Holdings) argued that OEMs would look at their business as a whole and move to more online ordering with fewer cars and reduced incentives - see our story Mercedes Head of Fleet Sales Describes Change of Strategy: "We're Changing Lanes" for more on this - but added: “RVs will rise, so that’s a benefit.”
Such a change in operations pointed to a change in thinking. With fewer cars available, and long lead times often in excess of 12 months, fleet managers now needed to place greater emphasis on planning fleet replacement cycles.
Kimberly Fisher (director, global fleet & travel for National Oilwell Varco) commented:
“We are ramping up our fleet in changing market conditions which is why a parking lot of vehicles has always been so beneficial for us. It becomes important to re-educate ourselves to hang on to old vehicles. We have experience of OEMs canceling orders and asking us to reorder, putting replacement vehicles further down the line. You have to start to plan more.”
Other issues covered in the meeting included the rising cost of fuel, which was pushing more fleets to consider electrification, and the changing landscape of electric vehicle availability.
Canada-based Hamid Dean (facilities leader & fleet manager at 3M) said that he had read Hyundai was making a big play for EV market share and aksed whether this was true and was there driver interest in the brand?
“Cars such as the Kona Electric and IONIQ 5 have been very well received,” responded Hans Damen. “Hyundai is also experimenting with advanced technology to make EVs an integral part of the grid with such features as vehicle to grid (V2G) and vehicle to load (V2L) technologies. We’re seeing them eat into Tesla market share.”
Ralph Morton, Global Fleet Management’s UK and European correspondent added that both Hyundai and its sister brand Kia had made big strides in the UK market thanks to EV model availability.
“The combined effects of exceptionally long lead times on premium EVs and the withdrawal of incentives, plus the more ready availability of product, has made both brands increasingly popular in the UK,” said Ralph. “What’s more, drivers are finding the cars good to drive, and nicely styled. It might be difficult for premium OEMs to recover their position in the future.”
Editor Mike Antich rounded out the hour-long discussion with a diary note for the next GFAB meeting to be held in person on 06 June in Miami prior to the start of the Global Fleet Conference.