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Market Trends

Looking Over the Horizon:Five Predictions and Two Wild Cards

June 13, 2006, by Mike Antich

1. Safety/Accident Management to Become a Greater Factor in Vehicle Selection.
We are already witnessing increased influence by corporate risk management in vehicle selection. For instance, some fleets are basing selector inclusion on NHTSA crash-test ratings. In fact, some fleet managers are hesitant to acquire vehicles not advised by the risk department out of concern that if a safety-related issue should result in an injury or fatality, they might be accused of ignoring the safety recommendation.
2. Distracted Driving to Become a ‘Hotter’ Hot Button.
Fleet managers are under pressure to minimize preventable accidents, which are increasingly attributed to distracted driving. Since most accidents are preventable, this is a potential cost avoidance strategy. It doesn’t take much for an accident repair to exceed $1,000. Even fleets with low accident incident ratios are under pressure to formulate more enhanced safety programs and policies. The company HR, Legal, and Risk Management Departments are driving these pressures. In today’s litigious environment, companies want to minimize corporate liability exposure, especially exposure resulting from distracted driving.
3. The Drivers are Getting Restless.
Driver satisfaction is becoming an emerging issue. There is a growing demand from drivers and department/division management for greater vehicle selection in the company selector. This is especially true at fleets that have sole sourced for a number of years. Although bottom-line considerations will trump driver dissatisfaction, nonetheless, it is becoming a greater issue for fleet managers. One variation of this is the increased frequency of drivers/management seeking policy exceptions on the type of vehicle assigned due to a medical condition or physical stature. Many fleets acquiesce to avoid potential workers’ comp issues.
4. MPG will Play a Bigger Factor in Vehicle Selection.
A trend among some commercial fleets is to use a minimum MPG requirement to place a vehicle on a selector. If fuel prices remain elevated, (or surpass the $4 per-gallon threshold) this will increasingly become the norm. Low MPG is already a factor with SUVs. More fleets are under pressure to eliminate large, and even smaller, SUVs from their fleets. One consequence to higher fuel costs is that employees offered a choice of a driving allowance or a company-provided vehicle are increasingly taking the company car option, producing fleet budget issues.
4. Specter of Inflation.
The emergence of inflation and higher interest rates is a concern to me. Inflation is seen daily in higher fuel prices. It is also seen with upfitted vehicles as aluminum and steel surcharges are added because of the dramatic price increases in these commodities. Inflationary pressures are impacting fleet maintenance with increases in the price of parts, replacement tires, and labor rates. Higher acquisition costs are another concern, especially with diesel trucks, which means higher financing costs due to higher interest rates and a higher tax basis.
5. Pushing the In-Service Envelope.
Companies continue to extend the service lives of fleet vehicles to reduce fleet expense. Strategies are being implemented to minimize lifetime vehicle mileage during this extended period to assist resale. More fleets are implementing territory realignments or vehicle reassignments to minimize mileage as vehicle service lives are extended.
Wild Card -- Longer New-Vehicle Warranty:
In a time of crisis and poor brand image, Hyundai extended its new-vehicle warranty to 10 years/100,000 miles, which proved to be a very successful stratagem. What would be the effect on fleet management if one of the Big 5 automakers adopted a similar strategy?
Wild Card – Telematics.
This technology will be a game changer, revolutionizing fleet management as we know it. This revolution will occur sooner rather than later. Initial results from fleets using telematic systems have been positive in identifying excessive idling, under- and overutilized vehicles, unauthorized usage of vehicles, inefficient routes, and scofflaw drivers. It is exciting to envision the capabilities of the next generation (and subsequent generations) of telematic applications. It’s a no-brainer to say that they will be much more sophisticated than today. But could telematics follow a variation of Moore’s Law, formulated by Intel co-founder Gordon Moore, who presciently predicted computing power would double every 18 months? Could there be an automotive version of Moore’s Law, in which onboard vehicle computing power doubles in every 36-month product cycle turn? These are my predictions. What are your’s? Let me know what you think.

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Author Bio

Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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