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Fleet Sales Drive Economic Recovery in Western Europe

Much of Europe’s economic recovery, especially in the Western European markets, is being driven by the automotive sector, with fleet sales playing a prominent role. In 2015-CY, fleet sales have returned to their historic norm.

December 2015, by Mike Antich - Also by this author

Source: General Motors
Source: General Motors

Fleet sales are a very important component of the European automotive market, accounting for more than half of all vehicle sales in some country markets.

Recovering from the sales meltdown that occurred during the 2008-2010 recession, European fleet sales have returned to historic norms, with some OEMs experiencing double-digit growth, as exemplified by Opel.

HUCKER
HUCKER

“Opel’s fleet sales this year are up 10 percent over last year, which has been primarily driven by light commercial vehicle sales. That success is responsible for much of our overall market share growth in Europe. Fleet is a vitally important part of Opel’s sales strategy,” said Ian Hucker, executive director sales Europe for Opel, GM’s main European subsidiary.

Hucker sees two elements to Opel’s sales strategy: “A lot of Europe’s recovery is fleet driven. Our product lineup is in a really great position to benefit from that. Second, we’ve initiated a commercial vehicle growth strategy a year or so ago, and that’s starting to pay dividends. Our new products are selling spectacularly well.”

Currently, fleet represents roughly half of Opel’s business in Europe, and that share percentage could increase, especially after the launch of the all-new Opel Astra.
The 2016 Astra, which went on sale in Europe on Oct. 10, 2015, is marketed as a Vauxhall and Opel model.

Debuting at the Frankfurt Auto Show, the 2016 Opel Astra is the 11th edition of the model, which has been a perennial bestseller in the European fleet market. The 2016 Astra is expected to play a key role in growing Opel and Vauxhall sales in Europe. The Astra has an all-new design in 2016 and is lighter for better fuel economy and decreased carbon emissions. The all-new Astra offers a range of engines, including a new 1.0L three-cylinder gasoline engine. An important technology offered for the first time in Europe with the 2016 Astra is OnStar, the personal mobility assistant. The launch of OnStar in the European market was announced last March at the 2015 Geneva International Motor Show. The Astra is the first new Opel/Vauxhall model to feature OnStar, which will subsequently be rolled out to other models.

Signs of Economic Recovery

After emerging from the financial crisis of 2008-2010, the European Union was beset by the “Euro Crisis” in Italy, Spain, and Greece.

Since then, there are signs of recovery occurring in the European economies, especially in the Western European markets, which have shown quite a bit of growth in 2015.
New-vehicle registrations in Europe have experienced double-digit growth, with the top five Western European markets, which are driving this growth.

“It is encouraging to see the growth in European vehicle sales continuing. All major markets and brands achieved strong results in September 2015 and this has continued the growth seen in recent months. The trend is well established,” said Brian Walters, vice president of data at JATO Dynamics.

In 2015, European vehicle production is now just 8.1-percent lower than 2007, but vehicles produced for export are up 67.5 percent, boosting capacity utilization to within 2-percentage points of the typical breakeven level of 80 percent factory utilization, according to a study by EuroGlass.

“While these signs of economic recovery are quite encouraging, they are offset by other, more difficult markets in Europe,” said Hucker. “Russia and Turkey spring to mind, as two difficult market environments that all OEMs have experienced during the course of calendar-year 2015. Although some markets are up and some markets are down, overall it’s a fairly static situation year-over-year in the overall European fleet market.”

A large component of the European fleet market is the vehicle-rental sector. For Opel and Vauxhall, the rental market represents about a third of their total fleet business.

Similar to the U.S., the vehicle-rental sector plays a bellwether role to the overall strength of both macro business and leisure activities.

“In Europe, the rental market performs a very valuable role within the overall GM portfolio in terms of providing that touchpoint with new Opel models, and the latest generation products,” said Hucker. “We make sure the product specifications renters experience is the level they want in a retail car. These are not basic cars that we put into the rental channels. These are well-equipped, representative models.”

Hucker added: “We manage the rental channel very carefully. It’s an opportunity to have new customers drive our vehicles and provide a healthy flow for factory orders, volume to the dealer network, and for remarket investment. But, we’ve got to balance it and get the right level, a level that’s appropriate and sustainable for the overall business.”

Opel and Vauxhall are Growing

In calendar-year 2015, total fleet business in the European Union member countries is at traditional industry levels, but some brands, such as Opel and Vauxhall, are experiencing double-digit fleet sales growth.

A key factor that will drive future Opel fleet sales growth are the new models in its product pipeline. Opel plans to introduce 29 new models between 2016 and 2020.

“Opel is seeing growth and the Opel growth story is very much on track, and continuing for another year. We’ve gained shares year-over-year, by August 2015, we sold 35,000 vehicles more than in the same period last year. With the new Astra in the market, this growth should accelerate even further,” said Hucker. “Our core fleet business is absolutely up and that’s a reflection of the new product range we have making great inroads into the different fleet channels.

SUTA
SUTA

To meet the growing demands of European and global fleet customers, Opel/Vauxhall has a pan-European corporate account team led by Ciprian Suta, pan-European corporate sales and leasing director, reporting to Hucker. This team of dedicated corporate account managers is based in different European Regions (Germany, UK, South-East Europe, and France) to support companies interested in a pan-European or global fleet agreement.

Market-by-Market Summaries

In September 2015, the European new-vehicle market maintained a healthy pace as sales increased by 9.7 percent, according to JATO Dynamics. In particular, the European market strengthened because of solid demand in the UK, Italy, and Spain.

European new-vehicle sales continued to increase in September 2015, completing 25 consecutive months of growth. The result is in line with the 2015 monthly average, while year-to-date data reveals a healthy 9-percent increase over 2014 at 10.77 million units.
Here is a market-by-market summary of current European fleet conditions:

France: Approximately 40 percent of the vehicles in operation in France are registered as fleet vehicles. Vehicles under fleet management are increasing. One key factor to this growth has been the decision by the French government to outsource some of its fleet management services.

Germany: More than 50 million vehicles are registered in Germany, of which, approximately 10 percent are registered as company cars. Almost 60 percent of the company cars are leased, with the primary fleet leases being an operating lease and full-service lease.

Italy: During the Euro crisis, there was a slump in Italian fleet sales, but recent fleet sales data shows the market is recovering. For example, there were more than 200,000 true fleet registrations in the first eight months of 2015, which is the highest year-to-date sales volume since 2008.

Russia: “The overall fleet demand in the Russian market is down, primarily due to the volatility in exchange rates and its impact on pricing,” said Hucker.

Spain: A vehicle scrappage program instituted by the Spanish government, similar to the cash-for-clunkers program in the U.S., has stimulated growth in both the fleet and retail markets. The program is set to expire at year-end 2015, but past expiration deadlines have been extended and some believe Spanish economic conditions may warrant another extension to the vehicle scrappage program.

United Kingdom: More than 60 percent of all vehicles sold in the UK are registered as fleet vehicles. In September 2015, UK registrations totaled more than 462,000 units, up by 8.6 percent over the same time last year. While 2015 is shaping up to be a record year in the UK fleet market, its September growth rate is only fourth among the Big EU 5 markets, but ahead of Germany, Europe’s largest market. (The Big EU 5 market is comprised of the UK, Germany, France, Italy, and Spain.)

The volume seller in the UK fleet market continues to be the Insignia, which is outselling its key competitors two to one in 2015.

Small and medium enterprises (SME) and corporate sales in the UK are on track to push the light commercial vehicle market to a 5 percent year-over-year increase in 2015. Another key product for Vauxhall is the new award-winning Vivaro commercial van, whose strong fleet sales has necessitated adding a second production shift to meet fleet demand.

In September 2015, registrations for the redesigned Opel/Vauxhall Corsa jumped 10.3 percent.

The SUV B-segment in the UK continues to gain share with the Opel/Vauxhall Mokka increasing its sales by 26.5 percent.

Turkey: Year-to-date, the overall Turkish fleet market is down. “A key reason is that there is a lot of volatility in exchange rates, which, likewise, creates volatility in the pricing. So, from that perspective the overall demand in the Turkish market is down,” said Hucker.

Opel Europe Names New Executive Director Sales

Ian Hucker was promoted to executive director sales at Opel Europe. In his new role, Hucker will be responsible for sales throughout Europe (excluding the UK, Germany, and Russia) in both retail and fleet.

Prior to his promotion, Hucker was Opel’s director of European Fleet. Hucker’s replacement as director, European fleet will be announced at a later date.
Earlier in his career, Hucker was the managing director of Opel Russia and of Opel Special Vehicles.

Hucker joined the company in 1992 with a Bachelor’s degree in manufacturing engineering from Brunel University in London.

About the Author

Mike Antich is editor of Automotive Fleet magazine, published by Bobit Business Media, and conference chair of the Global Fleet Conference held in North America. He can be reached via e-mail at [email protected]

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