By Mike Antich
I've been covering the fleet management industry for the past 25 years. Over this period, my travels have allowed to me to witness fleet management practices not only in North America, but elsewhere in the world. At first blush, there are dramatic differences from the U.S. fleet market. For instance, about half of the fleet vehicles operated in Asia are two-wheelers, particularly in India, Indonesia, Philippines, and Taiwan. Similarly, the European fleet market, which is the world's largest fleet market, is tremendously complex, comprised of 26 countries with differing regulations, tax schemes, and OEM preferences, with fleet vehicles tied to employment contracts.
Yet, despite these differences, there are also many similarities. Many of the challenges facing U.S. fleet managers are identical to the challenges facing their counterparts managing fleets elsewhere in the world. Universal challenges include vehicle downsizing, fleet rightsizing, cost containment, sustainability initiatives, sole sourcing, fleet standardization, compliance with governmental regulations and taxation, and the entry of non-traditional OEM nameplates (such as Korean models) into the fleet market, etc. The following are examples of fleet trends that extend beyond the U.S. and are offshoots of much larger global trends.
Procurement/Acquisition Trends: The global financial crisis of 2008-2009 and the current European sovereign debt crisis have caused companies across the globe to become more cautious about capital expenditures. Universally, cost containment is the No. 1 priority facing fleet managers around the world. In all global regions, the most common cost containment strategy has been to extend vehicle replacement cycling. Sound familiar?
As with U.S. fleets, many companies around the world have expanded the criteria a vehicle must meet before it is added to the fleet, such as meeting specific fuel economy goals, CO2 emission levels, or government accident ratings.
Vehicle & Engine Downsizing Trends: The ongoing fleet trend in the U.S. to downsize to smaller displacement engines is also occurring in Australia and Europe. This involves not only vehicle class size and engine displacement, but also rightsizing the overall fleet size. Higher fuel prices/taxes have increased operating expenses. This is prompting fleets around the world to spec smaller displacement engines. In addition, improved engine technology now allows downsizing to a smaller engine without impacting the fleet application. Another factor contributing to this trend is corporate sustainability initiatives, which encourages the placement of smaller displacement engines on selectors.
Higher Fuel Prices/Volatility: Another universal fleet challenge is coping with the high cost of fuel prices. Although the global recession put downward pressure on fuel prices, the current economic recovery is increasing demand and concurrent geopolitical uncertainty is causing fuel prices to ratchet upward. There is also pressure on governments to increase fuel taxes to generate revenues to offset budget deficits. (This is mitigated in some markets, such as the Middle East, Mexico, and Venezuela, where fuel prices are heavily subsidized and controlled by the government.)
Taxation, Legislative & Regulatory Issues: There is an ongoing trend to further increase the taxation of European and South American fleet vehicles, which are already heavily taxed. Already there are a multitude of taxes on European fleet vehicles, such as a value-added tax, vehicle excise duty tax, company car tax (benefit-in-kind), and other country-specific taxes. The latest is a CO2 tax started in the UK, which other European nations are starting to emulate. In South America, there are ever-changing complex sets of rules and regulations on vehicle taxation. Around the world, there is an escalation in the taxation of fleet assets. Corporate fleets are an easy target to generate tax revenue and almost every government needs additional revenue to counter budgetary shortfalls. I believe this a harbinger of things to come for U.S. fleets, which have relatively low taxation levels compared to other global regions.
Sustainability/Green Fleet Initiatives: Fleet sustainability initiatives remain strong in First World countries. There has been a proliferation of corporate initiatives to reduce greenhouse gas (GHG) emissions, with European Union (EU) fleets in the vanguard. EU environmental regulations are migrating from CO2 reductions to reductions in aggregated emissions, which include not only CO2, but also NOx and particulates. Despite the high cost, many companies, in all global regions, remain fully committed to achieving self-imposed sustainability targets, especially multinational corporations. There are an increasing number of global fleets establishing emissions baselines and developing selectors to select the right vehicles to reduce this baseline each succeeding year. In 2005, the average EU fleet vehicle emitted 160 grams of CO2 per kilometer. In 2010, it was 131 grams per kilometer, a dramatic improvement and a testament to the success of EU fleet sustainability initiatives. Increasingly, multinational companies are adopting global sustainability programs, which are migrating to the U.S. fleet market.
In the final analysis, fleet management, at its fundamental level, has more similarities than differences, regardless of global market. Oftentimes, fleet best practices emerge from outside the U.S., which is good reason for you to familiarize yourself with what's occurring in other global fleet markets.
Let me know what you think.