The Canadian fleet market consists of approximately 1 million light- and medium-duty vehicles. The average fleet in Canada operates between 35 to 45 units. Light- and medium-duty trucks and vans constitute approximately 60-65 percent of the market, while passenger cars constitute approximately 35-40 percent of the market.
More OEMs are invested in the Canadian fleet market then ever before and opportunities exist for end-users to leverage the competitive nature of the market to increase concessions through greater brand concentration. OEMs are focusing on safety, fuel economy, and driver comfort. Fleet operators are taking advantage of the competitive environment by including import brands as well as "Detroit 3" brands in their fleets and evaluating total lifecycle costs and extended replacement cycles to reduce costs.
Vehicle acquisition costs have remained fairly stable the past few years. The Canadian dollar has remained close to par with the U.S. dollar resulting in the gap between Canadian and U.S. acquisition costs having narrowed somewhat. Increasingly, Canadian fleets are moving from the traditional three-year/60,000 kilometer lifecycle to a four-year/80,000-100,00 kilometer cycle taking advantage of the OEM’s much improved durability, reliability, and longer warranty periods to further reduce operational costs. The combination of a mature market and low inflation has resulted in maintenance costs remaining steady.
Fewer used vehicles in the market, as a result of a number of OEMs curtailing retail lease programs beginning in 2008, have resulted in an increase in resale values, especially for three- and four-year-old, well-maintained vehicles.
Fuel prices are playing less of a role in used-vehicle purchasing decisions. Increased online activity has meant more buyers are pushing prices up for online visible auction channels. In 2008, fuel prices rose to a high of CA$1.40 per liter and an overall average of CA$1.16. Prices dropped approximately 17 percent in 2009 with a steady increase of 9.7 percent in 2010 and 19.7 percent in 2011. In 2012, there was a much smaller increase of 3.6 percent with an average price of CA$1.29 per liter.
Although gasoline prices aren’t as volatile currently, fleets are increasingly focused on more fuel-efficient vehicles.
The focus on reducing costs and emissions continues unabated. To accomplish this, the current trend is to downsize to smaller engines, utilize diesel and hybrid vehicle technology to achieve greater fuel economy without impacting fleet application. Gasoline continues to be the predominant fuel of choice for fleet operators. Gasoline or flex-fuel vehicles (gasoline and/or ethanol) constitute close to 95 percent of Canadian fleet vehicles. A limited ethanol fuel infrastructure in Canada severely limits its practical use. Diesel fuel infrastructure is growing with approximately 60 percent of fuel retail sites offering it across the country.
The OEM's diesel light-duty vehicle offerings are increasing, adding to its growing popularity among fleet operators. Commercial and corporate fleet adoption of electric vehicles is low. Select government fleets are operating electric vehicles in small numbers and electric vehicle charging infrastructure is still in its nascent stage.
As Canada increasingly becomes a more litigious society, there has been an increased focus on the cost of accidents and overall liability in the Canadian fleet market. A fleet best practice has been to create a safety shield, combining driver safety training, a mix of carrot and stick incentives and penalties for drivers to encourage safe driving, appropriate insurance coverage, along with regular review of driver abstracts.
While the province of Quebec continues to be the only province that mandates the use of snow tires, more Canadian provinces continue to consider the policy. Regardless, the majority of fleets will approve the use of snow tires out of safety and liability concerns. This policy extends the life of original tires, but can increase overall costs depending on replacement cycle.
There are fewer full-time fleet managers in Canada then ever before, especially in corporate and commercial fleets. Individuals responsible for managing the fleet have a variety of other responsibilities including, but not limited to, president, controller, purchasing, finance, procurement, and HR. As a group they are busier then ever and are required to multitask to ensure fleet objectives are met. There is more focus on outsourcing activity and consulting to review cost trends and propose tangible recommendations for further cost control and reduction. Fleets increasingly want information and insight readily available from their suppliers.
Fleets are making use of the following services from fleet management companies: fuel management, maintenance management, license renewals, outsourced fleet management support, accident support, taxable benefits, driver history, driver safety, and telematics. As well, fleets have more requirements for apps that can be used on smartphones and tablets, including mobile reporting apps, vendor searches, mileage reporting, driver vehicle ordering, and fuel-emissions impact. While hands-free in-car communication is popular a growing fleet best practice is the restriction of its use through policy and technology tool enforcement.
● Capital: Ottawa