2013 Barometer. Insight and analysis from Arval UK. arval.co.uk

Transcription

1 2013 Barometer Insight and analysis from Arval arval.co.uk

2 About the Corporate Vehicle Observatory Barometer Introduction The Corporate Vehicle Observatory (CVO) is an international expert platform for the fleet industry which was created by Arval in Every year the CVO releases a neutral and independent barometer; a detailed piece of market research looking at the operation of business fleets of all sizes in 16 countries around the world. Once again this year, the results from the CVO Barometer provide a clear view of the latest fleet trends, domestically and around the world. In some respects conditions haven t changed much since last year, while in others things have moved on considerably. Within this document we have picked out some of the highlights from the 2013 research, covering the most interesting and pertinent topics for fleet decision makers. economic conditions continue to be difficult and budgets remain under a high degree of pressure. However, we can see that a significant proportion of businesses are failing to take a total cost of ownership approach to vehicle selection. Widely recognised as the most effective way to manage costs, they may not be making the most prudent policy decisions. Despite this predicted focus on costs it is interesting to see that many businesses are positive about fleet growth in 2013; a clear indication of the importance placed on the role of the vehicle fleet in meeting business objectives. This year we have also seen a continued focus from businesses on reducing their environmental impact supported by an increasing acceptance of new vehicle technology as a means of meeting sustainable targets. The information and insight that we gain from CVO allows us to provide proactive advice to our customers and support them in making the best decisions to meet their specific business goals. I hope that you find this document interesting and that it provides some clarity on the direction that the market is heading. Best regards The 16 CVO countries: Belgium Brazil Czech Republic France Germany India Italy Luxembourg Netherlands Poland Portugal Russia Spain Switzerland Turkey In 2013 the barometer sought the views of 4,863 fleet professionals across the CVO countries and provides valuable insight into the ongoing challenges involved in running a business vehicle fleet. The research covers companies of all sizes this is how we break them down: Mike Waters Senior Insight & Consultancy Manager Arval Less than 10 employees employees employees 1000 employees 2 CVO 2013 Barometer Insight and analysis from Arval 3

3 Growth predictions are not stunted by pressure on costs Many businesses are not taking a TCO approach to managing costs In what remain challenging economic conditions, it is no surprise that company vehicle fleets are coming under significant cost pressure. What may be more surprising is that fleet operators are positive about growth this year. The results below show that a balance of around 40% of fleet decision makers expect cost pressures on their fleet to grow; slightly less than in previous years, but still a notable proportion. Cost pressure on the company fleet % which think that this year, cost pressure on the fleet will Businesses focused more on the up-front price of their vehicles than the Total Cost of Ownership (TCO) are likely to be making some below par decisions. In the, a similar proportion of fleet operators are focused on the purchase price when selecting a vehicle as those concerned with TCO. Main criterion when choosing a company vehicle % of companies considering the criterion as the most important when choosing a vehicle Decrease Increase % 49% 43% 39% 6 Purchase price 2 33% 6% 4 39% 48% 56% Total cost of ownership % Despite these conditions, a good proportion of fleet operators at larger companies are bullish that the number of vehicles they operate will grow. 29% of companies with 100 or more employees expect the fleet to expand (an 18% balance). This is a higher proportion than we saw in the past three years, a higher proportion than in other European countries and a more optimistic outlook than that of companies with less than 100 employees. Fleet growth potential in next three years Make of the vehicle Tax treatment Environment friendliness 1 8% % which think that the total number of vehicles on their company fleet will Europe Decrease 8% 16% 12% 29% Increase % 1 12% 1 10% 18% 10% 1 10% 1 13% It is encouraging that a good number of businesses have a requirement for a growing number of vehicles. Across all business sizes, a higher proportion of fleet operators expect the vehicle fleet to grow than those who believe it will decline during In some instances, cost is not the main motivation when formulating company vehicle policy. As the results show, for of the larger companies in the (100 employees), environmental impact is the main priority. However, for many businesses cost control is a crucial element of the vehicle selection process, and spending more than they need to do is not an acceptable position to be in. A TCO approach means taking into account the full range of vehicle costs which includes: depreciation, maintenance, fuel, insurance and administration. It provides a much more accurate view of the cost of a vehicle than the up-front price or the lease rental in isolation. We see numerous examples when we compare two or more similar vehicles which show that the monthly rental doesn t always equate to the biggest cost savings, particularly when you factor in taxation and fuel spend. As well as the potential to waste money over the lease of a vehicle, this can also have an adverse impact on driver satisfaction. Often the best performing vehicles from a TCO perspective are the most desirable for drivers. Businesses focused only on the initial costs may be taking away the option of a more attractive vehicle, under the false pretence that it will save them money. Whether you have one vehicle or one thousand, the opportunity to minimise costs is one that you must take. Even on a small fleet of vehicles, the potential cost savings over a three-year lease can be significant. As a consequence, we are seeing more and more businesses moving to a TCO approach for vehicle selection. 4 CVO 2013 Barometer Insight and analysis from Arval 5

4 Residual value predictions and fleet complexity point to Contract Hire Fleets are successfully reducing their impact on the environment Businesses purchasing vehicles outright are exposing themselves to the volatile and unpredictable used car and van market and the potential that their vehicles will depreciate significantly over time. 6 of these businesses with 100 or more employees do expect forecast vehicle values to decrease this year. Used car resale value % which think that the resale value of vehicles will This year s research confirms that practicality rather than principle is driving environmental performance with improvements being led by Government policy at many different levels. Over recent years vehicle manufacturers have made significant improvements in average CO2 levels in response to EU emission targets, and specifically in the, fleets and drivers have responded to Government policy that has encouraged and rewarded low CO2 choices. Being environmentally friendly is not the main motivation for many businesses (especially those with less than 100 employees) it is the most important criteria in of cases for larger companies and of the time for smaller companies. However, businesses are taking sustainable decisions even if it isn t their primary motivation. Main criterion when choosing a company vehicle % of companies considering the criterion as the most important when choosing a vehicle 13% 6 13% Increase Decrease Remain the same Don t know In a difficult economic climate when cost pressures are significant, businesses crave certainty and stability. This is exactly what Contract Hire can offer, shielding them from the risk associated with the used vehicle market and replacing it with a fixed monthly rental. The research also shows that the operation of a company vehicle fleet has become an increasingly complex activity. Nearly half of companies with 100 or more employees and around a third of smaller fleets think that fleet management is becoming more complicated. This is where companies that Contract Hire can benefit from access to expert advice and support from their provider, helping them to make sound decisions and filling any knowledge gaps they may have. Management of the company vehicle fleet Purchase price Total cost of ownership Make of the vehicle Tax treatment 2 33% % 1 8% Management of a company vehicle fleet is becoming Environment friendliness Europe 20% 32% 3 13% 48% 2 Less complex More complex Remain the same Don t know A combination of vehicle related taxation, regulation, new vehicle technologies, health and safety and environmental performance are just some of the factors that fleet operators must now understand and consider as part of the decision making process. It is almost impossible for one person to have all of the knowledge now necessary to optimise the fleet operation. Companies switching from outright purchase to Contract Hire will reduce their risk and gain access to a broad base of knowledge that can help them to meet their corporate goals. Ongoing costs (Total Cost of Ownership) and tax are also at the heart of the decision making process, both of which are largely influenced by vehicle emissions and fuel efficiency. In fact in more than 50% of businesses with 100 or more employees, environmental impact, tax and Total Cost of Ownership are the key vehicle selection criteria. Effectively managing cost and effectively managing environmental impact is now one and the same. Fleets must employ the most efficient vehicles if they want to keep ongoing costs down. The research clearly shows that government plays a role in encouraging improvement in fleet environmental performance. Of the companies with 100 or more employees, 6 agree that tax policy directly encourages better environmental performance. While the manufacturers have made great strides in efficiency: in 2000 average new car CO2 emissions were 181g/km, by 2012 this had fallen to 133.1g/km (a reduction of 26.). The percentage of low emission vehicles is also growing rapidly with 55. of the new cars sold in 2012 emitting under 130g/km. 6 CVO 2013 Barometer Insight and analysis from Arval 7

5 Vehicle technology delivers a new piece in the fleet jigsaw Despite the well publicised barriers to the take-up of new vehicle technologies, a growing number of businesses are positive about introducing them onto their vehicle fleet. Looking at businesses with 100 or more employees, 61% are focused on reducing fuel consumption, 59% plan to shift to less polluting vehicles and plan to incorporate electric vehicles into their fleet. Barriers for taking an electric vehicle % of companies considering the following elements as the main barriers for taking an electric vehicle Planned actions to reduce the company vehicles impact on environment % which plan to encourage the following actions Limited Autonomy 5 68% 6 6 Total: Shift to less polluting vehicles Shift to vehicles with lower fuel consumption Shift to less polluting vehicles 41% 60% 72% 61% 59% 86% Limited number of charging stations Loading duration too high 52% 61% % 58% 46% 81% Shift to electric vehicles Limited model diversity 36% 70% 41% 6 As you can see, the picture is a similar one for companies with less than 100 employees. This is a position further reinforced by the next chart which shows that in the next two years, of businesses with 100 or more employees definitely intend to introduce electric vehicles while 1 possibly expect to do so. From the current base, a adoption of electric vehicles would be a significant increase and interestingly, 18% of businesses are even willing to pay a price premium in order to operate zero emission vehicles. Technical uncertainties Changes of usage and organisation for the employee 3 26% Intention to use electric vehicles Europe % which intend to use Electric vehicles for PC or LCV in the next 2 years So, there are positive signs that business demand for new vehicle technologies is growing. For these technologies, as with more traditional petrol and diesel variants, the key is to understand what you need the vehicle for and then select the right one for the job. Probably 1 Certainly 2% Of course there still remain barriers to adoption. It is undeniable that fully electric vehicles have a limited range which is why some fleets look to hybrids or range extenders as a more practical option while we wait for advances in battery technology and a larger charging network within the. 8 CVO 2013 Barometer Insight and analysis from Arval 9

6 Some businesses are not addressing driver behaviour Companies now have a wide choice of safe and efficient vehicles. However, it is a false economy to select the right vehicles without also addressing driver behaviour. This year the research shows that 31% of companies with 100 or more employees are doing nothing to address driver behaviour, nor are 62% of companies with less than 100 employees. There is no doubt, the way that drivers operate a vehicle has a huge impact on mpg performance, emissions, safety and the cost of operation. Businesses really should put as much thought into educating and managing their drivers as they do into vehicle selection if they want to optimise fleet performance. Actions undertaken in order to minimise consequences of drivers behaviour % Actions undertaken in order to minimise consequences of drivers behaviour on TCO 29% 62% 59% 9% 31% 1% Yes Plan to do No Don t know The driver can impact the Total Cost of Vehicle Ownership (TCO) in a number of ways: Inefficient drivers will use more fuel They are likely to accelerate the wear and tear process leading to an increase in maintenance costs and associated downtime They are more likely to be driving aggressively and at higher speeds increasing the chances that they will be involved in accidents and pick up fines Plus outside of cost considerations, there are other impacts that must be recognised. Things like company reputation and employee wellbeing which don t necessarily fall within the TCO calculation but do have a direct impact on the business none the less. Inefficient drivers tend to drive at higher speeds, they tend to accelerate and brake aggressively and they often take risks on the roads. It is only through ongoing education and training that you can influence behaviour, and an effective programme can result in significant and sustainable cost savings. For more analysis from Arval, we have created a number of short CVO videos. You can view them on our You Tube channel 10 CVO 2013 Barometer Insight and analysis from Arval 11

7 Call: Arval Centre, Windmill Hill Business Park, Swindon, SN5 6PE WH /13 arval.co.uk