Multinational corporations have operated vehicle fleets around the world since the 1950s, but these country-specific fleets were typically managed independently by a country manager, often with little oversight by the corporate headquarters. Up until the late 1990s, no corporation had a global, or even regional, fleet management reporting structure, with the possible exception of Canadian subsidiaries of U.S. parent companies.
The first time I ever heard the term “global fleet management” was in 1991 when I interviewed Gordon West, the corporate fleet manager for Pfizer, as he started his second year as president of NAFA. He predicted the next evolution of the fleet management profession would be the emergence of global fleet managers. Up to this point, there wasn’t a single person on the entire planet who had a job title that included global fleet management.
Talk about prescient.
To the best of my knowledge, the first person to have global fleet responsibility was Theresa Ragozine, who in 1997 was named worldwide commodity manager for fleet at Johnson & Johnson, which at the time had a global fleet of 33,000 vehicles.
Another pre-2000 pioneering manager with global fleet management responsibilities was Joe LaRosa, who in 1999 was named associate director global fleet for Bristol-Myers Squibb, managing a global fleet of approximately 14,000 vehicles with a global spend of approximately $200 million.
Struggle to Gain a Market Foothold
In the early 1990s, and still today, Europe was the world’s largest fleet market, about one-and-a-half times larger than the U.S. fleet market. Then, as well as today, the UK was the largest European fleet market. But at that time only a few U.S.-headquartered fleet services companies had operations in the UK. Two examples were PHH and US Fleet Leasing (USFL), which entered the market following its 1986 acquisition of the Hertz fleet leasing portfolio in Europe. These U.S. lessors were attracted to the UK market because of the common language and the high percentage of business-use vehicles. In the UK, company cars were provided to employees three to four pay grades below comparable positions within U.S.-based companies. Vehicles were often provided in lieu of additional cash compensation in the UK under an HR policy which maximized the personal income tax benefit.
In addition, the UK was viewed as a foothold for future expansion of business operations to the European continent. PHH entered the UK fleet market early in 1972, but struggled for the next 10 years to build market share. However, in the early 1980s, the UK fleet market improved dramatically, primarily due to what was known as Thatcherism. During this period, there was a liberalization of capital markets and the loosening of credit restrictions in the UK, which were favorable to third-party fleet service providers. These economic changes were stimulated by the policies of Prime Minister Margaret Thatcher and became known as the “managerial revolution.” This redefined the relationship between UK corporations and the UK government, requiring businesses to manage their operations more efficiently, creating an environment receptive to outsourcing in-house fleet functions to third-party service providers.
As its business improved, PHH expanded outside the UK in the mid-1980s to Ireland and Germany. PHH’s greatest success in the UK market was a card-based fuel management program. By the early 1990s, it had 600,000 vehicles under its fuel management program in Europe; one reason for this success being that fuel was three times more expensive in the UK than in the U.S. Over the lifecycle of a UK fleet vehicle, the cost of fuel was equal to the cost of depreciation, making fuel management one of the most critically important fleet management services.
Creation of the European Union
A watershed moment in the history of global fleet management occurred on Feb. 7, 1992, when the Treaty on European Union (popularly known as the Maastricht Treaty) was signed by the members of the European Community to integrate their nation states into a European Union. Signed in Maastricht, Netherlands, the treaty became effective on Nov. 1, 1993. The treaty led to the creation of a common currency, the Euro, facilitating the negotiation of pan-European sourcing and fleet services contracts.
The Maastricht Treaty prompted a surge of pan-European fleet leasing initiatives. In 1992, the largest pan-European lessor was LeasePlan, headquartered in Almere, Netherlands, which had operations in 12 European countries. It operated in the U.S. as LeasePlan USA and LeasePlan International.
Another major pan-European lessor was GE Capital Fleet Services, which entered the European fleet market with the acquisition of Avis Lease and Fleet Management from its UK-parent company. Afterwards, GE Capital Fleet Services went on a buying spree acquiring numerous local fleet leasing companies throughout continental Europe. In 1997, GE Capital Fleet Services created a global sales team headed by Senior Vice President Bob Miesen.
With the collapse of the Iron Curtain, LeasePlan expanded its operations eastward by establishing its first Eastern European business unit, LeasePlan Ceska in the Czech Republic, which started operations in Prague in 1995. Concurrently, large multinational fleets began to create the framework to negotiate multi-country sourcing contracts and fleet management service agreements. Among the pioneering corporations were Johnson & Johnson, FedEx, Johnson Controls, Pfizer, Coca-Cola, Philip Morris, Mattel, Allergan, Imperial Chemical Industries, GlaxoSmithKline, PepsiCo, Nestle, Unilever, Ecolab, and Siemens.
“The individuals who led the initial thrust for doing a global fleet agreement had little or no input on other fleet management issues, such as car selection, replacement cycle, collision repair, liability insurance, or personal use policies,” said Dennis LaLiberty, who served as the first-ever vice president of international marketing for Wheels, a position he assumed in 1992. LaLiberty retired from Wheels in 2002 following a 44-year career with the company and was succeeded by Norman Din, who serves as vice president – strategic sales.
A key hindrance to pan-European fleet initiatives is that Europe is not a single fleet management market. Each individual country has its own culture, language, tax regime, business regulations, political and economic conditions, and vehicle preferences with buying sympathy to locally produced brands. In addition, in-country business units pushed back against the corporate parent resenting it dictating the types of vehicles they can acquire.
Throughout the late 1980s and early 1990s, U.S. lessors – ARI, Wheels, Donlen, and Emkay – expanded internationally through a series of strategic partnerships to expand their global reach.
In 1989, ARI named Phil Procida to be vice president international operations, a position he held until his retirement in 2005. In 1989, Procida took on responsibility for global operations, starting with Canada. In 1992, he scouted various automotive companies in Mexico to handle vehicle deliveries for ARI clients. There, he met the Zapata family, and fostered a relationship that led to the creation of ARIZA, the joint venture between ARI and Zapata, in 1993, which continues to this day. Procida helped ARI establish and introduce Global Fleet Services, the first alliance of leading global fleet companies. Succeeding Procida was Rob Hill, director of global sales and consultation.
In 1995, PHH (now Element) and Arval created a global alliance, which continues to exist as the Element-Arval Global Alliance. Arval was founded in 1989 and is fully owned by BNP Paribas. Arval operates in 26 countries in Europe, Asia Pacific, South America, and Africa. Spearheading the effort to add additional partners to PHH-Arval Global Alliance was Jim Rallo, VP strategic partnerships for PHH, who successfully signed partnerships with lessors in Mexico, Southern Africa, Australia, and Japan.
In the early 1990s, PHH acquired a vehicle crash repair processing company in the UK, which it renamed PHH Accident Management. One interesting piece of fleet trivia, as related by Wayne Smolda, CEO of The CEI Group, is that the renaming of the UK company to PHH Accident Management marked the first time the UK fleet industry was exposed to the business term “accident management.” As a result of this name change, the term “accident management” was generically adopted in common use throughout the UK fleet industry and ultimately migrated beyond the UK and is now used throughout the European fleet industry.
At much the same time, Wheels, Inc. established an international partnership with leading independent lessors under the banner of Fleet Synergy and, more recently, became one of the two founding partners, along with ALD Automotive (principally owned by the large multinational bank, Société Générale S.A.), in a global fleet alliance offering coverage in 54 countries, including all of North America and Western Europe.
In 1996, LeasePlan appointed Richard Pipenhagen to be its senior vice president, global sales and marketing, where he successfully championed a start-up sales effort that targeted the international fleet market that resulted in signing numerous major international fleets through 2000. “Much of the success was derived via support and partnership with LeasePlan International in Almere, The Netherlands,” said Pipenhagen. “Frequent meetings with multi-national companies, both in U.S. and abroad, was an essential aspect of the ascendancy of this market.”
In 1998, GE Capital Fleet Services signed a major lease agreement with the service business unit of IBM, that covered its 2,000 vehicles in the U.S., 2,000 in Australia, and more than 300 units in Mexico and Canada. Also, around this same time, ExxonMobil signed a regional fleet management agreement for all of its business operations in the Western Hemisphere. In 2003, Mattel signed a pan-European fleet agreement with LeasePlan.
In 2005, CEI opened CEI Europe and started a call center in Barcelona offering accident management services to fleets operating in Spain, Belgium, Germany and the UK. “That experience illustrated the vast differences between the U.S. and European accident management service models,” said Smolda.
Following its purchase by Hertz in 2011, Donlen expanded its reach beyond North America through Hertz’s global footprint in South America, Europe, Africa, and Asia. In addition, Donlen has five strategic partnerships allowing it to provide global fleet management solutions and long-term rentals in 144 countries. Strategic partnerships to provide international fleet services in Europe and Turkey are with Athlon Car Lease, a member of the Daimler Financial Services global network, and with Lex AutoLease in the UK. In Mexico, Donlen created a strategic partnership in 2010 with Masterlease, a major vehicle financing and fleet management company that is owned by Grupo Financiero BanRegio. In Australia and New Zealand, Donlen is partnered with FleetPlus, a member of the Eclipx Group.
Starting in late 2011, ARI entered the European fleet market through a series of acquisitions:
- In December 2011, ARI purchased UK-based fleet Support Group Ltd. (FSG), Britain’s largest independent fleet management company. FSG was founded in 1987 and provided fleet management services to more than 55,000 cars and trucks in the UK.
- On July 8, 2013, ARI announced it acquired the fleet management segment of Fleetlevel+ Services GmbH in Germany. Previously, Fleetlevel+ Services was a subsidiary of Alphabet International, providing services in the German market for more than 30 years. The acquired business was renamed ARI Fleet Germany.
- In early October 2013, ARI reached an agreement to purchase the German fleet company HPI and its related European business entities.
- In April 2015, ARI acquired the German technology company netcar24, which offers enterprise software solutions for the fleet management industry.
ARI manages its continental European operations from its offices in Stuttgart and Frankfurt, Germany, and its UK operations from Chippenham, England.
As more multinational fleets approached automotive OEMs about negotiating multi-country sourcing agreements, many OEMs responded by creating international fleet sales organizations. At first, these efforts were focused on pan-European sourcing agreements. In the early 1990s, Vauxhall/Opel began actively negotiating multi-year pan-European fleet sourcing contracts. Renault and Volvo were among the first European OEMs to set up an international fleet sales organization.
In 1999, General Motors named Steve Higgs, who previously worked at GM’s Vauxhall European operation, to the newly created position in the U.S. of manager, global & North American fleet development. Higgs commenced expanding the internal lines of communication at GM to respond to multinational fleet needs in major markets around the world. One of Higgs early accomplishments was the creation of a global fleet advisory board. General Motors held its first global fleet advisory board meeting in 1999. Shortly thereafter, GM Fleet Operations introduced a global fleet website. Increasingly, large multinational corporations approached automotive OEMs wanting to leverage their global procurement footprint and tended to gravitate to those OEMs with global sourcing capabilities.
Not only was there a global expansion by fleet suppliers, but technology was providing multinational corporate headquarter staffs the resources to more closely manage company vehicles outside the home country. In particular, the incorporation of web-based fleet management systems further facilitated global fleet management by providing the headquarters offices of multinationals greater visibility of their far-flung fleet operations. Invariably, this enhanced visibility led to embarrassing revelations of large numbers of vehicles in different country operations that were previously unknown to the home office. One internationally well-known financial institution discovered, unbeknownst to itself, that it had more than 1,000 company vehicles in Poland, which was dramatically out-of-kilter with the ratio of employees eligible for company-provided vehicles. These types of revelations abounded and could fill an entirely new blog.
What also emerged at this time was a trend to create centralized procurement offices, which were tasked to consolidate a multinational’s fleet purchases. Examples of companies in the vanguard of this trend were Hewlett-Packard, Microsoft, Cisco, and Citicorp.
Start of a New Chapter in Global Fleet
At the start of the 21st Century, the ranks of managers with global fleet responsibilities began to proliferate. Among the pioneering managers with global fleet management responsibilities (and their start dates) are:
- 2000 – Katie Rixman, manager, global fleet for Brown-Forman based in Louisville, Kentucky.
- 2002 - Bolivar Fuentes, global procurement category director at Grupo Bimbo based in Mexico City.
- 2003 – Tom Settel, fleet manager for Colgate-Palmolive based in New York City.
- 2004 – Mike Sims, global fleet planning & acquisitions manager for the Church of Jesus Christ of Latter-Day Saints based in Salt Lake City.
- 2005 - Benoit Viard, procurement director for Alcatel-Lucent based in Paris, France.
- 2008 - Pascal Struyve, global travel, fleet & meeting services director at Ingersoll Rand based in Brussels, Belgium.
- 2008 - Fred Turco, senior director, Pfizer, responsible for HR and Fleet Procurement and Fleet Operations team leadership, based in New York City, managing an annual total indirect spend under remit of $1.4 billion.
With the growing corporate interest in global fleet management during the first decade of the 21st Century, Bobit Business Media and Nexus Communication partnered in 2013 to create the annual Global Fleet Conference, which alternates between Europe and North America. As a testament to the strength of multinational interest in global fleet management, every Global Fleet Conference has sold out since its inception five years ago.
In October 2016, three fleet driver safety organizations joined forces to create The Global SafeDrive Alliance, whose mission is to provide a single-source global fleet safety program, including reporting and certification. Comprised of The CEI Group (U.S., Canada, and Puerto Rico), CEPA SafeDrive (Latin and Central America), and VVCR (Europe, Middle East, and Asia-Pacific), the members of the Alliance operate on six continents and offer support in more than 35 languages.
In another development, the Automotive Fleet & Leasing Association (AFLA) in 2016 created a globalization committee to create an organized mechanism for fleet industry associations from other regions of the world to network between themselves to share best practices and local market knowledge.
The 26-member AFLA globalization committee launched a worldwide outreach initiative to fleet associations around the globe to create a consortium based on shared principles that are institutionalized in a memorandum of understanding. The group is known as the Global Fleet Networking Consortium and in August 2016 the first member to join AFLA in the consortium was the Australasian Fleet Management Association (AfMA), which has approximately 550 members. The next fleet association to join the consortium was the Asociación Mexicana de Arrendadoras de Vehículos (AMAV), which translates to the Mexican Vehicle Leasing Association. Representing the Global Fleet Networking Consortium in Asia is the China Road Transport Association (CRTA), which has 1,000 members. In Europe, the consortium is represented by the Association of Car Fleet Operators (ACFO), which is the U.K.’s largest fleet group with 350 members.
The consortium will hold its first strategic planning meeting on June 9, 2017, in Miami to identify its governance, online communication infrastructure, and future direction.
It is an exciting time to be in fleet as a new chapter in the industry’s future is unfolding. All indicators point to increasing interest in global fleet management, especially as new technology further facilitates the ability to efficiently and effectively implement this multinational initiative.