Alphabet lists top five key market trends for 2018
Alphabet has published its list of the key market trends for 2018, which will see moves towards zero-emission/connected vehicles gather pace while WLTP and GDPR will make their presence felt.
1, Fleet take-up of ULEVs to accelerate, but diesel still on the agenda
For electric and hybrid vehicles, 2018 will be another year of wider choice and Alphabet expects to see close to 200 EV and ULEV models available in the UK market next year, with the most advanced plug-ins able to travel over 200 miles on a single charge.
However, it says that diesel will definitely remain in the mix in 2018 and onwards, despite ongoing changes to the tax treatment.
Head of pricing and planning Clive Buhagiar comments: “Diesel still has an indisputable advantage over other fuel types, in terms of overall costs and longevity, especially for larger, heavier vehicles and higher business mileages. There’s still every reason for companies to choose diesel for their ‘workhorse’ car and LCV roles. Where the market is seeing change is around smaller vehicles, lower business mileages and occasional business users. Here, the rapid proliferation of drivetrains offers fleet operators and their employees more choice than ever before.”
And in response to industry concerns of fleets switching to cash allowances, Buhagiar adds: “Despite the BIK and VED increases, our analysis shows that for the majority of employees paying higher or lower rate tax, if you choose the right vehicle – in terms of its P11D value, CO2 output and fuel economy – the traditional company car scheme remains more attractive than a cash offering, both to the employee and the employer.”
2, Developments in connected vehicles continue but GDPR will dominate
2018 will see continued updates to connected cars across fleets, reaping benefits for companies in terms of improved service, convenience and productivity.
However, Leanne Christmas, head of compliance at Alphabet, warns that 2018 is also the year when the implementation of the General Data Protection Regulation (GDPR) – which comes into effect on 25 May next year – will be felt across every business and organisation, and fleets will need to get permission to harvest and use data gathered from telematics devices if it contains ‘personally identifiable’ information in order to ensure compliance.
She adds: “Some of the key challenges will be establishing who is liable for data breaches. This may include updating some ‘legacy’ tracking systems in fleet vehicles that could be in breach of the new rules unless the data is truly anonymous, as well as developing processes to give drivers access to their data upon request.”
3, UK economic outlook to continue challenges
Alphabet warns of little prospect of any let-up from Brexit-related economic and political uncertainties in 2018, as we get closer to 29 March 2019.
Head of asset risk Neal Coleman advises: “We all know that business doesn’t like uncertainty, so companies will naturally focus on the aspects of their business that they can control, such as overheads and investment. They might hire people on shorter initial contracts, in which case flexible, medium term rental could be a good alternative to consider.
“One of the critical challenges for companies is to maintain their business competitiveness until the fog of Brexit negotiations clears. Cashing-out employee drivers could be a big mistake because company cars – when they are correctly chosen – give businesses a major advantage in terms of recruitment, retention, productivity, road risk and environmental performance.”
4, Likelihood of increased fuel prices in 2018
Petrol and diesel prices held relatively steady during 2017 after rising nearly 20% in 2016, thanks to a slow increase in the world oil price and a generally weaker pound, partially offset by the ongoing freeze on fuel duty.
However, Clive Buhagiar, head of pricing and planning at Alphabet, adds: “Even with improvements in fuel efficiency and increasing numbers of alternative powertrain vehicles on fleets, global conditions in 2018 increase the probability that fleet fuel costs will rise again.”
5, WLTP arrives in September 2018 for all new vehicles
While the recent Autumn Budget allayed immediate concerns over the impact of the new worldwide harmonised Light vehicles Test Procedure (WLTP) on company car taxes, David Bushnell, product manager – mobility, warns that fleets cannot afford to put the issue on the back burner until 2020.
WLTP generally records higher CO2 emissions than the outgoing NEDC test and WLTP results are expected to drive BiK liability from 2020 onwards.
From September 2018, every single vehicle will have a WLTP value for its CO2 emissions output, as well as an NEDC-correlated or NEDC-equivalent figure which will be used for taxation up to 2020.
Bushnell adds: “From a fleet decision maker’s perspective, two years is not a lot of time to prepare your fleet policy for the new WLTP taxation regime.”