Cost Pressure

Costs are rising, but so is fleet size

The majority of UK fleet professionals expect cost pressures to increase this year. But while the pressure on company fleet budgets are expected to be squeezed, the size of their vehicle fleet is likely to increase – a view most prominent with fleet professionals at companies with 100+ employees. This demonstrates a focus on managing and reducing fleet costs, but not by cutting the number of vehicles.

Mike Waters, senior insight & consultancy manager at Arval said: ‘Given the current economic conditions in the UK, and around the world, it really is no surprise that fleet operators expect cost pressures to increase over the course of the year. However, it is reassuring that they do not plan to respond to this by cutting the size of the vehicle fleet.

‘The reality is that companies across the UK rely on their vehicles to operate irrespective of the economic conditions. So while cost pressure creates a focus on the best ways to manage fleet spend, it often shouldn’t translate into a reduction in fleet size.’

Telematics

Surprisingly large number of firms looking at telematics

Research from the report shows that a third of large companies (100+ employees) are currently using telematics systems, with the major driver behind it being to  track their vehicles.

While telematics are used much less by smaller companies, UK adoption is higher than in other European countries while further growth is expected this year.

Of the systems being used by the larger fleets, reducing fuel consumption, monitoring unauthorised use of a vehicle and monitoring driver behaviour are all significant reasons for use.

• 33% of large fleets plan to implement telematics in the next three years.

Safe driving

Majority of businesses believe safe driving is their responsibilty

46% of businesses with less than 100 employees and 63% of companies larger than that, believe they share responsibility for safe driving behaviour, rather than putting all of the emphasis on the driver. In the UK this attitude is particularly apparent, and represents greater corporate ownership of driver behaviour than in other European countries.

There are also a well-defined set of fleet practises in place to support this ideology – with significantly more than half of companies prohibiting the use of hands-free mobile phones (which isn’t a legal requirement) and more than a third having policy’s in place to restrict unsafe travel such as driving home after a work party.

Around 10% of companies have even introduced driver incentives and rewards to promote safer behaviour on the roads.

• 33% of the largest company’s surveyed (1000+ employees) have driver training in place; as do 18% of smaller companies surveyed (sub-100 employees).

Residual values

Fleets believe used values will drop in second half of the year

Research suggests that the majority of UK fleet professionals expect vehicle resale values to fall this year while at the same time the take-up of contract hire is expected to grow, partly as a result of this market view.

Increased certainty and a reduction in fleet risk exposure are the key drivers, for this according to the independent research from the Corporate Vehicle Observatory (CVO) Barometer.

• 59% of large fleets think the resale value of vehicles is likely to decrease.

The role of mobility manager

More firms want a specialist to take charge of all transport and mobility

The role of the mobility manager is becoming a more popular one in the UK, with around a third of larger firms having such a person covering both fleet and travel.

This could encompass things like train travel, flights and taxis, alongside the normal responsibilities of a fleet manager. This trend is even stronger in other European countries. Taking a holistic view of business travel is a trend that is being seen among large businesses in the UK (100+ employees). 28% of these companies incorporate a function that covers all types of employee business travel, and not just the vehicle fleet.

• 28% of large firms have a role that covers all types of employee business travel, including fleet.

Decision making

Boards mostly in charge of policy and fleet decision-making

The modern company fleet often needs to satisfy a wide variety of stakeholders and there are a breadth of disciplines involved as the ultimate fleet policy decision-maker, although the board remain the group in charge of the majority of decisions.

Arval’s Mike Waters said: ‘We would expect to see this approach within smaller companies where resource doesn’t allow for a fleet specialist, or the breadth of departments that larger companies employ, but according to the Corporate Vehicle Observatory (CVO) Barometer, this approach is consistent across the board.’

Specifically in the UK, it shows that in the largest companies (1,000+ employees), senior management are most likely to make vehicle policy (41%). In 17% of larger companies a fleet manager or director is the key decision maker, while the procurement and HR functions play a central role in 25% of the largest companies.

In companies with 100–999 employees the finance function also plays a role, owning fleet policy decision making in 16% of cases. In the smaller companies (sub-100 employees) decision-making is dominated by senior management.

Mike Waters, added: ‘That senior management take such an active role in setting company vehicle policy and reinforces how important it is to the success of the business. The multi-disciplinary nature of decision makers is also a clear confirmation of the central role a business fleet can play in the success of the business.’

• In only 17% of larger companies a fleet manager or director is the key decision maker.

Electric vehicles

Man y businesses see a role for electric vehicle in their operation

The research shows that many large businesses in the UK are taking an holistic approach to mobility and the introduction of new vehicle technologies, including electric.

It shows that amongst the largest and smallest businesses, the proportion of fleet professionals feeling that electric vehicles could play a role has grown. In fact 43% of the largest companies (1,000+ employees) currently see a role for electric vehicles on their fleet – a 12% growth against the previous year.

Mike Waters at Arval said: ‘With such a broad range of vehicle variants becoming available, it is no surprise that some companies are looking closely at the composition of their fleet. Of these new technologies, electric vehicles have a high profile and in certain circumstances will be an effective option.’

• 43% of the largest companies currently see a role for electric vehicles on their fleet.