The State of Car Policies in Europe and Key Fleet Challenges - 2013-2014 Edition - GE Capital
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GE Capital The State of Car Policies in Europe and Key Fleet Challenges 2013-2014 Edition
Foreword 2014 is upon us and with the New Year comes a sense of optimism. Broad economic data suggests that Europe is turning a corner and, within our industry, fleet managers look to be starting the year on an optimistic note as well. This is highlighted in our first State of the Car Policy Report. A vast majority of respondents from our survey – 80% to be precise – expect their fleets to either grow or remain stable over the next two years. Likewise, over three quarters of respondents told us they are looking to expand their fleet into new countries, as they aim to take part in the fast growth of emerging markets such as Russia, Turkey and Brazil. These findings point to promising signs of confidence returning to the market. To be sure though, there are still critical issues to overcome, and we developed this report with this in mind. Our goal has been to identify the key challenges that global, European and local Fleet Managers currently face and benchmark how companies across Europe structure their car policies, in order to help them overcome these challenges. Indeed, with the first edition of the report, we are embarking on a year-long discussion entitled The Fleet Debate, which will look at the different aspects of the fleet management universe, providing managers with the opportunity to find best practices from across the industry and to engage with peers and opinion leaders to identify new ways to improve the efficiencies of their fleets. We are excited to see that the fleet industry is eager to engage in such a debate. Over 70 companies managing a cumulative 150,000+ vehicles took part in this survey, and leading fleet managers have also provided invaluable insights on the current environment which you will find in the pages of this report. We hope you enjoy The State of Fleet Policy report and join the Fleet Debate. Maurice Benisty, Chief Commercial Officer at GE Capital International
Contents
Executive summary: 10 Key findings 2
Data and methodology 3
Section 1: The state of car policy 4
• By type of fleet: comparing personnel only and commercial and personnel car policies 5
• By fleet size: comparing large and small fleets 6
• By geographic region: comparing globally and locally managed fleets 7
Section 2: The three key challenges 9
• Driver behaviour 10
• Global fleet management 12
• Fuel management 13
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intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific
advice relevant to particular circumstances.
Except as required by law, neither GE Capital EMEA Services Limited, nor its affiliated companies or businesses accept any
responsibility and shall not be liable for any loss or damage whatsoever, whether in contract, tort (including negligence) or
otherwise arising from reliance on the information, materials and opinions contained in this document.
1
10 Key findings
01. 02.
Financing through an operating “Improving drivers behaviour”
lease is the main funding method represents the top challenge
for corporate companies fleet managers face (61% of
respondents)
03. 04.
80% of the fleet managers expect 60% of respondents told us their
their fleets to grow or remain fleet management is handled
stable in the next 24 months internally
05. 06.
The most common car allocation All firms surveyed stated they
methods are: have fuel card solutions in place
• Total Cost of Ownership (TCO) (25%) and 42% of them are looking for a
• Fixed budget (21%) global solution
07. 08.
Limited use of telematics (22%) 60% of respondents already
for influencing drivers behaviour, operate on regional or global scale,
currently mainly used in with 54% looking to further optimise
combined fleets (personnel their global approach
& commercial)
09. 10.
Almost two thirds (62%) of Over three quarters (78%) of
respondents told us they have respondents intend to expand their
active CO2 restrictions in place. fleet into new countries. Russia,
Most common restrictions are Turkey and Brazil are the most
within 130-140 g/Km limits. anticipated new geographies
2
Data and methodology
An online survey...
72 fleet managers responded to an online
150,000+ questionnaire structured to cover five
categories:
• Choice of car
company cars
managed across • Environment
72
• Fuel management
• Insurance
• Driver behaviour
companies The responses were collected during October
& November 2013.
…with insights from experts
Following the survey, a panel discussion was organized to debate the outcomes of the survey and gain
further insights from leading European fleet managers.
Robert Patrick
MSD Luc Dendievel
Regional Sourcing Manager at Merck, Sharp and Category Director Fleet EMEA at Johnson &
Dohme (MSD) EMEA. Robert co-leads MSD’s fleet Johnson, Luc strives to optimise fleet management
procurement, policies and operations for their at international level. In 2008, Luc won the Fleet
12,000 vehicle fleet in the EMEA region. In 2012, Europe Innovation award and, in 2013, he was
Robert was co-winner of Fleet Europe’s International elected International Fleet Manager of the Year at
Fleet Manager of the Year award. MSD is a leading the Fleet Europe Awards. Johnson & Johnson is a
research-driven healthcare company. multinational medical devices, pharmaceutical and
consumer goods manufacturer.
Andy Leeden Paolo Penati
Global Fleet Category Manager for AstraZeneca, European Sourcing Manager for the Stanley Black
Andy is responsible for global fleet strategy, supplier & Decker group, Paolo is responsible of 4,800
management, development, procurement and vehicles to manage thought coordination of 20 local
execution, covering more than 70 markets and fleet managers. Stanley Black & Decker is a global
20,000 vehicles. AstraZeneca is a global, innovation- manufacturer of hardworking, innovative, powerful
driven, integrated biopharmaceutical company. industrial tools and household hardware.
Structure of the report
The report is structured in two main sections.
• The first section outlines the key elements of a typical • The second section analyse the three key challenges fleet
car policy and allows users to benchmark their own fleet managers are currently facing, related to driver behaviour,
policies against others, depending on the type, size and global fleet management & fuel management
scope of their fleet
3
Section 1:
State of car policy: overview
According to our respondents, the most typical car policy structure is funded through an operational
lease, managed internally with TCO-driven allocation approach and active CO2 restrictions.
Funding 47%
Fleet managers are mainly funding their fleet Operational lease
through operational lease. This funding solution is
Fleet management
used by almost half the companies we surveyed.
The largest difference in funding methods is Outright purchase
between the personnel-only and combined fleets. 20 %
Finance lease
16% 17%
Fleet management
The majority of companies surveyed are managing
23%
their entire fleets internally. However, the larger Internal management
and more global the fleet becomes, the more
often companies look to outsource their fleet
management activities.
60% Outsourcing
Partial outsourcing
17%
Allocation strategy
The most common fleet allocation strategy
is based on TCO, followed closely by fixed 25% TCO driven
budget approach. TCO driven is a strategy most 21% Fixed budget
commonly used for large and global fleet, as well 17% Car list
as for combined (commercial and personnel cars) 11% Car list with option
policy, whereas for personnel car fleet the fixed 13% Environment
budget is more commonly used. 13% Others
Environment
The majority of companies surveyed have active
CO2 restrictions in place. The companies having
such restrictions in place have global and large
fleets.
38% No active CO2
restrictions in place
62% Active CO2
restrictions in place
Driver behaviour
Currently about half of the fleet managers surveyed
have programmes in place to influence the
No programs in place
behaviour of their drivers. Such programmes are
aimed at influencing
less common in personnel only fleets. “Influencing driver behaviour
driver behaviour” has been highlighted as the #1
Programs in place
challenge for fleet managers. We find the number
of companies with such programmes is likely to
51% aimed at influencing
driver behaviour
increase over the coming years.
4
State of car policy: by fleet type
Significant differences exist in how a car policy is structured to manage personnel only or combined
(commercial and personnel) fleets.
Combined cars Personnel only cars
Commercial and personnel cars
Funding
60%
Taking out an operational lease remains the
preferred funding solution for fleet managers Operational lease
with combined cars and personnel cars policies. 41%
Fleet management
However, for the combined car policy, fleet
Outright purchase
managers often use more than one solution. 22%
19% 19% Finance lease
16%
12% 12%
Fleet management
We find that combined cars are mainly managed
internally by the fleet managers. However, for 25% 20%
Internal management
personnel cars, the fleet management type is more
differentiated. Here, the chosen management type
7%
67% 54% Outsourcing
is heavily influenced by the company’s strategy, 26%
Partial outsourcing
with the majority choosing to outsource or manage
internally.
Allocation strategy
The allocation strategy is specific to the type of
fleet used. TCO-driven is a key allocation strategy
17% 28% 21% TCO driven
for all fleet and remains the first one for combined
12% 24% Fixed budget
car policy. While the most common allocation 17% 16% Car list
strategy for personnel cars is with a fixed budget. 11% 11% Car list with options
13% 18% Environment
13% 10% Others
Environment
Fleet managers set up more active CO2 restrictions
No active CO2
in personnel car policies than in commercial & 41% restrictions in place
personnel cars. For both policies, companies state 55%
the maximum CO2 allowed emission at 140g/km Active CO2
45% 59% restrictions in place
Driver behaviour No programs in place
aimed at influencing
“Influencing driver behaviour by providing drivers driver behaviour
with programs” is an initiative more developed
Programs in place
for commercial & personnel car policies than for aimed at influencing
personnel car policies. In this case, companies have driver behaviour
developed driving programs such as e-training. 45% 55% 59% 41%
5
State of car policy: by fleet size
Car policies reflect the differences between the size and the complexity of managed fleets. This is
most evident between small and large fleet policies.
Small fleet Large fleet
(0-250 cars) (>2000 cars)
Funding 43%
41%
Taking out an operational lease is the most used Operational lease
funding solution for fleet managers of any fleet size. Fleet management
However for commercial & personnel car policies
24% Outright purchase
particularly, smaller fleets are more likely to use 21%
23%
two types of funding, rather than a sole financing 14%
17% 17% Finance lease
arrangement.
Fleet management 6%
We find small fleets are mainly managed internally.
However, for large fleets management is more 11%
Internal management
35%
broadly spread across the three management
options, with internal management being the most 83% 38% Outsourcing
Partial outsourcing
prevalent.
27%
Allocation strategy 17% 30% TCO driven
Managers of large fleets prefer to allocate
cars with a TCO-driven approach. However,
23% 13% Fixed budget
19% 16% Car list
the picture for small fleets is more
fragmented as fleet managers use fixed 8% 13% Car list with options
budget, TCO driven, car list and environment 15% 17% Environment
options at approximately the same rate.
16% 11% Others
Environment
65% of large fleet respondents have active CO2 35% No active CO2
restrictions in place. While only 41% have this restrictions in place
initiative in place for small fleets. The average CO2 59%
Active CO2
emission allowed for all fleet sizes is 140g/Km.
41% 65% restrictions in place
Driver behaviour No programs in place
aimed at influencing
Small fleets are developing more programs in their driver behaviour
car policy to influence behaviour of their drivers in Programs in place
comparison to the large fleets. aimed at influencing
driver behaviour
39% 61% 46% 54%
6State of car policy: by geographic region
Differences in car policies are also dependent on the geographic scope of a fleet.
Local fleet Global fleet
Specific to one country Centralised policy for multiple countries
Funding 48%
Taking out an operational lease is the most used 44%
Operational lease
funding solution for all fleet managers, regardless
of their geographic scope. Fleet management
22%
20% 21%
Outright purchase
18%
13%
12%
Finance lease
Fleet management
10%
Fleet managers operating localised fleets are more
7% Internal management
likely to manage them internally. Those managers 37%
operating a global fleet policy are likely to take a
more differentiated approach.
83% 37% Outsourcing
Partial outsourcing
26%
Allocation strategy
Fleet managers who operate on a single
17% 28% TCO driven
country basis are mainly allocating cars with a 28% 12% Fixed budget
fixed budget. However, for global fleet,s ‘TCO- 17% 21% Car list
driven’ allocated cars is the more prevalent
11% 7% Car list with options
approach.
13% 16% Environment
13% 16% Others
Environment
67% of large fleet managers operating with 33% No active CO2
restrictions in place
a global car policy currently have active CO2 55%
restrictions in place. In comparison, only 45% of Active CO2
large fleets operating with a local car policy have
this function in place. Across all fleet sizes, the
45% 67% restrictions in place
average CO2 emission allowed is 140g/Km.
No programs in place
Driver behaviour aimed at influencing
driver behaviour
Both local and global fleet are developing
Programs in place
programs in their car policy in order to influence aimed at influencing
driver behaviour. driver behaviour
48% 52% 47% 53%
7Driver Behaviour
“The safety training
is the most effective
solution for changing
driver behaviour”
Luc Dendievel,
Johnson & Johnson
Global Fleet Management
“Global policy approach is a challenge faced by fleet managers”
Paolo Penati, Stanley Black & Decker
Managing Fuel
“It is very complex to
setup international Fuel
programmes. There are
limited options available
in the global markets for
consolidating actual
fuel data”
Robert Patrick,
MSD
8Section Two
Three key challenges
According to the fleet managers participating in the
survey the key challenges needing to be addressed in the
following year are:
Out of the total of respondents:
61% 54% 48%
are concerned are looking to want to improve their
about driver optimise their fuel management
behaviour global fleet approach
Out of this group: Out of this group: Out of this group:
• 4
1% are looking to • 7
0% are looking for an • 4
2% are willing to
reduce damages and international coverage and have a fuel card with
accidents by influencing centralisation of policies international coverage
driver behaviour
• 1
3% would like to have • 3
8% would like to
• 3
0% are aiming to reduce more expertise and manage fuel costs and
CO2 consumption knowledge of local markets track fuel consumption
9Driver behaviour
Influencing drivers to reduce damages and accidents
is the most common challenge
61 %
of the fleet managers
Share of companies with active programmes
in place for influencing driver behaviour,
by fleet type
Global fleet 53%
surveyed are concerned
about driver behaviour European fleet 42%
Local fleet 52%
Large fleet 54%
However only
36%
49%
Medium fleet
Small fleet 61%
have initiatives in place aimed at
influencing driver behaviour
Personnel cars only 41%
Small fleet and combined personnel & commercial car policies
are the largest implementers of programmes targeted at
influencing driver behaviour. Personnel & commercial cars 55%
Is telematics a solution for influencing
driver behaviour? FLEET
THE
DEBATE
2014
MSD
Do you use telematics to monitor and influence
the driving behaviour of your fleet?
Johnson and Johnson is providing the drivers with an
online training program based on safety. According
to Luc Dendievel, the E-driving training is the most
effective solution for changing driver behaviour and
Yes enhancing safety on the road.
According to Robert Patrick, from MSD, there is little
point in having telematics if there is no strategy or
No
resource allocated to analyse the data or a programme
22% 78% of action to utilise that data to improve driver behaviour
and increase operational efficiency.
10Driver behaviour
Influencing driver behaviour to reduce CO2 emission is
a key objective for fleet managers
61 %
of the fleet managers are Does your fleet have 39%
active CO2 restrictions in
looking for ways to influence place today?
driver behaviour to reduce the 61%
CO2 emission No Yes
Fleet managers are looking to reduce their fleet What is the maximum allowed CO2 emission
CO2 emission by implementing CO2 restrictions within your policy? (g/km)
in their car policy. 61% of fleet managers have
already implemented active CO2 restrictions with
an average capping of 140g/Km. >180 11%
Additional measurements such as engine 150-160 15%
reduction have been implemented for limiting
CO2 emission. 130-140 63%
100-120 11%
Does your fleet have other active
Case Study
measurements to limit emissions/
pollution in place today?
Local UK fleet: 800 cars, 300 cash takers
Challenge: The Customer asked GE Capital to conduct a study
Engine reduction 58% to optimise car policy by providing a tax and cost efficient car
option to reduce CO2 emission.
Imposed fuel 38% Solution: We designed and introduced a new policy for users
where all cars were put on a contract purchase product and
would automatically have CO2 emissions reduced from
Limit on fuel consumption 27% 120g/km to 110g/Km.
Results: The customer was able to claim capital allowances
Gearbox 14% on the fleet (as they were using a contract purchase product)
ensuring 100% tax relief in year 1, due to the lower CO2
emissions. This resulted in a saving of €24 per month per car,
Sootfiller 7% while the car choice for the employee did not diminish.
11Global fleet management
Centralising policy and processes for multiple countries is
a growing focus for fleet managers
54 %
of the fleet managers surveyed
Case Study
Pharmaceutical Company
20,100 cars in 18 countries
Challenge: The customer engaged GE Capital
to address the challenge of having a wide
are looking to optimise their global portfolio of OEMs and models on its company car list.
fleet approach – with their top Solution:
• Benchmarked OEMs and models choice against peers in
priority to have a centralised policy their industry.
with international coverage • Identified costs reduction by focusing on fewer OEMs and
models for their global policy.
• Negotiation with OEMs for developing global contracts with
the best pricing solution.
Results: GE Capital consultants delivered over €14MM in
60% of fleet managers surveyed are
operating on a European or global scale with
53% savings through a reduction of OEM’s from 13 to 4 on a
global level.
single or multiple suppliers.
Based on the results of the survey, a global fleet
manager is more frequently dealing with three On what scale do you operate your fleets?
or more leasing providers across the Globe.
Additionally, global fleet generally allow for Global 26%
more than 5 car manufacturers in their policies European 33%
whereas, local fleet allow between 1 to 4 car
manufacturers. Local 40%
Number of partners by geographic scope
FLEET
THE
DEBATE
2014
How many fleet leasing providers do you have?
17% 19% 1 Supplier
According to Paolo Penati at Stanley Black 23%
2 Suppliers
& Decker, global policy is a challenge faced 61% 22% 38% 19% 38%
3 Suppliers
by most fleet managers. Their global policy 23%
24% 8% More than
is generally centralised and managed by a 3 suppliers
Global Fleet Council, however in order to have Global scope European scope Local scope
a tailored European-specific approach, Stanley
Black & Decker has established a European How many car manufacturers does your policy allow?
Fleet Council as well. 8%
17% 11% 1 Manufacturer
28% 29% 32%
However, some countries in the CEE region 2-4 Manufacturers
need specific, stand-alone policies. The 61% 46% 36%
5-9 Manufacturers
difference of leasing solutions, manufacturers 22% 17% 21%
10 Manufacturers
offered, taxation and regulation across the and more
various regions have to be supported by Global scope European scope Local scope
different suppliers.
12Managing fuel
Having a single fuel card solution covering all markets
remains a challenge
100 %
Of fleet managers use fuel
National
Does the fuel card have national
International
or international coverage?
cards in their fleet policy
54% of fleet managers are trying to
improve their approach to fuel management,
62% 38%
with their top priority being to have a fuel card National International
with international coverage
Can the fuel card handle only one gas station
Based on the responses, all participants are using fuel cards network or multiple networks?
in their fleet policy. 62 % of the fleet managers have national
fuel cards for their fleet and 38% have already implemented
international fuel cards. All networks
24%
39%
Moreover, we find fleet managers allocate their gas-station 39% 34%
1 network
coverage in relation to their fleet scope. Those managers 56% 43% 41% Limited number
operating local fleets are more likely to use one network only, of gas stations
6%
whereas those managing global fleets typically have a fuel card 17%
covering multiple networks.
Global scope European scope Local scope
FLEET
THE
DEBATE
2014
Andy Leeden, Global Fleet Category Manager at
AstraZeneca: “Having a single fuel card with a global
or even regional coverage would be an ideal solution.
When fuel typically represents 30% of TCO; it is a
considerable cost. A unique fuel card could reduce
fuel pricing, management time and improve reporting
and compliance. However, to my knowledge there is
currently no solution on the market, offering one fuel
card with global or multi region coverage.”
13Managing fuel
Tracking fuel consumption is a significant cost challenge
Managing fuel is always considered as a Do you provide fuel for private use of the vehicle?
challenging topic.
85% Yes
38% of the fleet managers are looking
to improve fuel management for their fleet.
15%
No
Based on the results, 72% of fleet managers monitor the actual
fuel consumption of their car fleet drivers in order to optimise
fuel management. This process is largely used for local and Case Study
small fleets.
Do you monitor the actual fuel consumption Fully outsourced fleet, 200 cars, 18 countries
of your car fleet drivers?
Challenge: A GE Capital customer had been concerned
about the impact on fuel costs while their cars were used for
No Yes
personal use.
Global fleet 61% 39% Solutions:
• Introduced a whole life cost policy for improving the
Local fleet 79% 21% average miles per gallon by 20% as well as reducing
fuel costs
Large fleet 69% 31% • Established a cost and tax efficient method of providing
the private fuel benefits.
Small fleet 82% 18% • Analysed each individual driver’s levels of private mileage
and determined individual free private fuel levels.
Personnel cars only 71% 29% Results: GE Capital consultants delivered annual cost savings
of € 281,000 savings and a reduction of 81% of private
Personnel & commercial cars fuel costs.
72% 28%
FLEET MSD
THE
DEBATE
2014
According to Robert Patrick from MSD, it is very fuel consumption is a key variable in analysing Total
challenging to setup International Fuel programmes. Cost of Ownership of fleets, and that in making vehicle
There are limited options available in the global selections fleet managers fully understand expected
markets for consolidating actual fuel data. Spend on fuel costs for differing vehicle options.
a global level and differing taxation treatments for According to Luc Dendievel from Johnson & Johnson,
fuel across markets, further complicates the analysis. the potential solution for tracking fuel consumption
In some instances it can take a lot of manpower to would be to implement a telematics solution in every
track real fuel consumption, therefore in a number car. The provided data would track the actual fuel
of markets MSD focuses on theoretical consumption, consumption for each driver and therefore some
whilst in others real data can be tracked. The primary tailored solutions can be implemented in order to
focus in managing fuel costs remains ensuring that reduce fuel costs.
14Looking to the future
80 %
Of the fleet managers expect Share of companies expecting their fleet to remain
stable or increase, by type of fleet
their fleet to remain stable or
increase over the next 24 months Global fleet 50% 39%
Local fleet 41% 38%
46%
34%
20% Large fleet 38% 38%
Remain stable Increase Decrease
Small fleet 59% 35%
The majority of fleet managers expect their fleet size to remain
stable over the next 24 months.
Global fleet and personnel & commercial cars are expected to Personnel cars only 41% 26%
see the highest growth over the next 24 months. Moreover, 94%
of small fleet managers expect their fleet to remain stable or
increase. Personnel & commercial cars 55% 39%
Additionally, global fleet managers expect their responsibilities to
Remain stable Increase
expand to new geographies.
FLEET 81 %
THE
DEBATE
2014
Of the fleet managers plan to expand their
fleet business towards new countries.
The top priorities are:
Andy Leeden, Global Fleet Category Manager,
AstraZeneca, said, “Globally the fleet size will remain
stable, but the trend is that the fleet is moving.
It’s moving eastwards. There will be a decline in
Western Europe and North America, but growth in
the emerging markets. Our fleet follows the demand
for our medicines.”
50% 48% 36%
Russia Turkey Brazil
15We hope you found the State of Car Policy Report informative & useful for your
involvement with Fleet management.
This report forms part of a wider range of activity from ‘The Fleet Debate’ –
a community of industry discussion, peer debates & best practice sharing centred
around Fleet Management.
Throughout the year, GE Capital will be arranging a series of webinars, roundtables &
workshops with business leaders & peers to discuss current challenges, the evolving
market, and to debate the future of Fleet Management; in addition to supporting an
online hub for accessing useful Fleet insights & best practices.
FLEET
THE
DEBATE
2014
Join the
Fleet
Debate
If you would like to know more about The Fleet Debate please email
fleet.debate@ge.com
or keep your eyes on the Fleet press for upcoming debates & insights.
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