Top Trends in Executive Fleet Management
Photo courtesy of istockphoto.com/martin-dm.
The perception of executive fleet management has shifted in recent years, and though its functions in fleet still remains largely the same, the way executive fleets are a handled may continue to evolve.
Indeed, while ensuring that executive vehicles in fleet receive great care and handling due to company stature, the types of vehicles that executives are engaging with and the way they’re managed has changed in the last few years. Not every fleet is the same, but some trends over the last few years have been consistent.
Automotive Fleet found that a major trend in executive fleet programs was an emphasis on a cap-cost allowance, which is similar to what AF reported last year.
“We are primarily seeing that the company is setting a specific cap cost (max cap) per the executive’s level. If the driver goes over that cap cost, this is allowed by policy, but the additional expense is the personal responsibility of the driver,” said Joe Perno, department head of account management at ARI.
Rob Parker, director of strategic consulting for Element Fleet Management, also noted this trend.
“We do see quite a few executives on cap-cost allowance. It’s a very popular option right now and is definitely a significant portion of what we see in our straw poll,” said Parker.
Some fleet managers have also observed this trend as being a common practice, due some perceived benefits.
“From what I have seen, it is much more prevalent to offer an allowance versus (providing) a vehicle. It is much easier to manage and does not limit an executive’s choices,” said Brian Wielgosz, manager of fleet and ground transportation services of North America for Sanofi.
Indeed, besides the allowance methodology that offers flexibility in vehicle selection, there is also the standard company car sourcing approach where the company directly provides a vehicle to the executive, possibly via the help of an FMC. In other instances, an executive would be presented with a selector approach, where he or she is presented with vehicle choices based his or her level in the company.
“Other fleets maintain a liberal selection policy, the organization’s culture is the key driver to executive vehicle offerings and policy. Some companies have adopted reimbursement programs and/or personal-use contributions into their policy,” said Brad Jacobs, director of strategic consulting, Merchants Fleet Management.
Indeed, company culture is an integral part of an executive fleet program; while the executive should be given flexibility when it comes to his or her vehicle selection, they aren’t necessarily granted free reign to select any vehicle.
“We do have some standards. The vehicle shouldn’t be exotic, and you should be able to engage with customers and have multiple people in the car,” said a fleet manager who spoke on condition of anonymity. “But for the most part, it’s whatever they want.”
A lot of focus for executive fleets goes into carefully tending to the executives who participate in an executive fleet program, and this is partly driven by the fact that vehicles are used as a retention and recruitment tool.
“Luxury vehicles continue to be leveraged for recruitment and retention, in some cases vehicles are negotiated as part of executive compensation and are the expectation,” observed Jacobs of Merchants.
Pemo said he also continues to see luxury cars used as a recruitment and retention tool for executive drivers.
Indeed, having this program helps affirm to the executives their significance in the company.
“In an executive fleet, it is the structure of the program that is a critical recruiting tool. Top talent is difficult to come by, so it is imperative to have a program that demonstrates the importance of their role with the company and is of obvious value to the executive,” said Adam Orth, CAFM, fleet services manager, General Mills.
On the other end of the spectrum, Beth Wills, director of fleet administrative services for Donlen, observed that the aforementioned lean toward the allowance methodology has diminished the demand as vehicles for recruitment and retention, though many still seek the perks of the company-provided executive vehicle.
“The allowance-based methodology has not become the primary way to compensate executives, but it is more and more common. As allowance continues to become more prevalent, it eliminates the use of luxury vehicles as a recruitment and retention tool,” said Wills.
Indeed, because of the variety of perks that executives are offered given their stature, others have observed the emphasis on the company vehicle.
“Our executives have the option between the allowance and a vehicle, but they all choose the company vehicle because they recognize the value in it,” said Orth of General Mills.
Regardless of how the executive vehicle is obtained, offering “white glove” services is also crucial to those participating in an executive fleet program. In some cases this might be someone who oversees an entire company’s fleet, or it can be relegated to a person who specifically handles executive vehicles.
Jacobs of Merchants echoed the overall significance on providing white glove services.
“Many executive fleets are higher touch, and require detail-oriented focus, time, and in some cases concierge or white glove processes as executive level drivers are among the highest paid employees with the most influence on fleet and business direction,” he said.
Wills of Donlen said at some companies, this person would also work with the executive to ensure compliance with fleet policy.
A fleet manager who requested anonymity noted their executive fleet program as being self-contained. It’s managed as its own platform, and looked over by one person. This person is dedicated to delivering the high-level service of vehicle acquisition that executives expect. Other FMCs offer similar services specifically for executive fleets.
“When it comes to the executives, they do have a different expectation of service level, and we have developed a separate team that handles sourcing the vehicles as well as the interaction with the executive,” said Parker of Element.
For FMCs if the selector approach is taken then the process starts with partnering with the fleet manager and stakeholders to determine the best vehicles to be included in the selector, then the FMC would walk the executive through the order process until finally the vehicle is delivered.
“Some people appreciate going to the dealer to pick up the vehicle, yet some people don’t like that experience,” said Parker of Element. “Depending on the approach the executive’s team would like, we can customize the experience to include going to the dealership, getting a personalized walkthrough of the vehicle and then taking it home as part of a courtesy delivery, or having the vehicle delivered to the executive’s residence or business so they can drive it home.”
Indeed, an anonymous fleet manager also noted the high touch approach used to aid during the vehicle selection process.
“We look at it as a very high touch, positive experience, and we want the people in these roles to feel valued, and they’re really excited about the car, so we want it to be a good experience for them. We really put a lot of time and effort into the customer service piece, and the order process,” said the anonymous fleet manager.
Providing executives in an executive fleet program with flexibility is a must and this includes the actual vehicle selections (though there may be some restrictions, as noted earlier). Because of this, several experts involved in executive fleet management have observed a variety of interests in vehicle type.
Indeed, some of the types of vehicles executives are most interested in reflect current automotive trends. Beyond simply being a luxury vehicle, there is a larger interest in SUVs and a continued push for alt-fuels.
“We have seen a rise in luxury EVs and a return to the large luxury SUV demonstrating the commitment to the benefit,” said Jacobs of Merchants.
A fleet manager who chose to remain anonymous has observed similar trends.
“There was a time when people wanted the Ford Explorer, and then there was a period where people wanted Lexuses and then there was a period where people wanted Range Rovers. I think now the car of choice seems to be larger SUVs, like a Yukon or the Audi. Those seem to be the most popular now,” she said.
Meanwhile, Perno says ARI has seen executives opting for premium manufacturers such as BMW, Mercedes-Benz, and Audi, and, further reflecting existing trends, with a slight preference towards SUVs.
Parker of Element observed these trends and broke down what he saw into three categories: executives who want larger vehicles, for a family or partner to use, (e.g., a lot of SUVs including, Escalades, Suburbans, etc.); those who want a sports car or a seven-seater luxury car (such as a BMW X5), and lastly, those who are trying to meet green initiatives.
Indeed, reflecting an interest in achieving company green initiatives and reducing their carbon footprint, some executives have turned to alt-fuels, including Teslas. This also helps contribute to any goals regarding company carbon-dioxide emissions, said Parker of Element. Though making executives acquisitions, such as this, might be more difficult than a normal fleet acquisition.
“In some ways buying one Tesla might be more difficult than buying 1,000 Fusions,” said Parker.
Executives with a company vehicle, for the most part, must adhere to driver policy as they would any other drivers in a fleets overall operations. Likewise, these drivers must also be reprimanded in the same way a typical fleet would if they broke a policy.
Indeed, just to get started, executives would need to qualify for a company vehicle by passing the guidelines set forth within the fleet policy, observed Wills of Donlen.
“We require anybody with a company car to go through driver training, and that’s from our delivery drivers to anybody that has an allowance or is in a car that we own,” said an anonymous fleet manager.
However, another anonymous fleet manager noted that executives are not always held to the same standards of policy compliance, though some safety aspects still do apply.
“It is much more relaxed. While we enforce certain components (distracted driving) we do not include them in our fleet safety program (so no training, MVR monitoring, or risk assessment),” noted Wielgosz.
ARI’s Perno further elaborated on this.
“For the most part, the executive fleets that we manage are held responsible to the fleet policy. Often, a separate parameter group will exist specifically for the executive drivers with more tolerance in line with a more limited exposure associated with these executive employees,” noted Perno.
Earlier this year, Fleet Financials, sister publication of Automotive Fleet magazine published an article about on what appeared to be a widespread decline in the size of executive fleets. It found that there ultimately was not a ubiquitous decline in size, but rather a shift in how executive fleets were defined and who qualified for an executive vehicle.
Indeed, fleet management experts noted companies are stricter about who qualified for an executive fleet program, appearing to reduce its size, as well as a leaning toward vehicle reimbursement programs, as mentioned earlier.
However, some restrictions toward executive fleet programs sometimes are implemented as means for companies to cut costs.
“Downward pressure on fleet costs has been a long term focus for many organizations. True perk vehicles are often seen as low hanging fruit to begin the process of fleet cost reductions, and focusing executive vehicle offerings to those with client facing roles is a logical first step,” said Jacobs of Merchants.
Some fleet experts have also observed, this inclination may have to do in part due to the great recession.
“I think the way people viewed executive fleets drastically changed during the downturn, and that's when you had most companies move away from executive fleets. They went to auto allowance; everybody was about cutting costs and that was one of the first things to go,” said an anonymous fleet manager.
However, Jacobs of Merchants observed that this tightening of executive vehicle offerings in 2008 and 2009 has retracted as the economy has recovered. However, the impact on the landscape of executive fleets has remained for some.