Fleet managers are facing the toughest conditions in 30 years, as a range of challenges converge to threaten the sector, according to Doug Hyett, commercial director, Fleet Operations.

Doug Hyett, commercial director, Fleet Operations.

Running a fleet today is clearly a far more complex operation than it once was – and is now shaped by a variety of factors. These issues include government legislation; increasingly stringent environmental targets; matching vehicles to operational needs; maximising vehicle availability and harnessing the power of data.

As leasing companies continue to struggle with falling residual values, the financial impact on the market is significant. Just when we need more people to adopt electric vehicles, the costs are rising. However, manufacturers, seeking to meet legislative targets, are offering bigger discounts to keep prices manageable. While these discounts can depress residual values, there is a ‘sweet spot’ to be had – a balance where discounts and residuals align optimally.

The current funding landscape is dynamic and highly competitive, meaning fleet managers who can tap into a wide range of market options, rather than being beholden to one or two suppliers to fund their vehicles, will benefit. At the same time, businesses are under growing pressure to reduce their carbon footprint to meet ESG (Environmental, Social and Governance) goals.

Transportation is often the first area to face scrutiny. While many organisations aspire to lead with EVs, the transition will initially involve some costs. However, under certain conditions, it can be more cost-effective than maintaining a fleet of internal combustion vehicles.

As a result, some companies may conclude that they cannot afford the switch, leading them to consider scrapping their company car fleets in favour of offering employees a cash alternative, which in turn increases the number of grey fleet vehicles. This is clearly not an available option for light commercial vehicle (LCV) fleets. With LCVs, the transition to electric poses several challenges, primarily ensuring the vans match with operational needs and that range reduces when laden, which – combined with limited access to charging – reduces their viability.

The role of the fleet management partner has undergone a profound shift. Today’s fleet managers face an intellectual and operational challenge far more complex than the relatively simple conditions of the 1990s. It’s no longer just about cost, convenience and operational efficiency. The role has expanded to include providing strategic consultancy to guide companies through the complexities of today’s fleet market. It’s about offering expert business guidance, best practices and navigating the uncertainty of an ever-evolving sector.

With the increase in National Insurance contributions from this month, along with ongoing pressure to raise wages, many organisations may face difficult decisions, including potential job cuts – possibly even affecting fleet managers or those responsible for fleet management within the company. While some companies may view fleet managers as an overhead luxury that they could do without, their true value to a business is too often underestimated. They fulfil a vital role in ensuring the smooth and efficient running of a fleet, enabling an organisation to concentrate on its core profitable business activities, without having to divert resources from other departments.

Never has the need for the services of a fleet management partner been greater – companies can benefit from their expertise and relieve themselves of a major administrative headache and free up their time to concentrate on their core business activities.