Fleet Europe 53 UK by MMM Business Media

EDITORIAL

We all need clarity he motto for this year’s Geneva Motor Show was ‘The Green Vision’, focusing on sustainable development and

green technologies. This was quite appropriate, as the ‘greening’ of fleets remains topical for any company serious

about its corporate responsibility in wider society. Fortunately, manufacturers’ efforts restrict CO2 emissions and ever more stringent ‘green’ vehicle taxes are providing them with some leverage. An increasing number of companies is curious to know more about electric and hybrid cars, and that’s a promising development. Unfortunately, the suppliers can’t always meet the rising demand adequately. Can any manufacturer deliver a lot of 120 electric cars in 6 different countries? Can any lease company propose a transparent and costefficient business model to finance them? As long as the reply to these questions remains incomplete and unclear, the uptake of electric and hybrid vehicles in fleets will remain minimal. Of course, setting up a transparent and credible business model is difficult, in light of the unknown territories explored by new technologies, and the accompanying lack of statistical information. And yet it's essential. Especially for multi-brand rental companies, if they want to avoid a switch in funding towards the car manufacturers, because they have first hand access to all necessary information and their objective is to put their vehicles onto the market. A switch will have consequences for the international fleet manager, but we’re not there yet. First of all it’s clear that the fleet decision makers need clarity in the jungle of new technologies. Therefore I invite you to the first edition of the Fleet Europe Technology & New Powertrains 2011 Event in Brussels on June 7th, where experts present the current e-Mobility and new powertrain offerings on the market, their TCO approach and business model, and the tax and legislation status. You can subscribe to this unique event by visiting "www.fleeteurope.com/newpowertrain"

“ There is a need for a transparent and reliable business model for electric cars. ” Steven SCHOEFS Chief Editor

EDITORIAL TEAM Editor in chief: Steven Schoefs (sschoefs@mmm.be) Team: Tim Harrup, Stijn Phlix, Jos Sterk, Julie Widart Experts: Professor Peter Cooke (University of Buckingham), Vincent Rupied (Leaseurope & CVO), Bart Vanham (Fleet&DriverCare), SALES & MARKETING TEAM Sales Director: Marleen Neukermans (mneukermans@mmm.be) Sales Manager: David Baudeweyns (dbaudeweyns@mmm.be) Sales assistants: Patricia Lavergne (plavergne@mmm.be), Romina De Gregorio (rdegregorio@mmm.be)

EDITOR Development Director: Caroline Thonnon Managing Director: Thierry Degives Editor/CEO: Jean-Marie Becker

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Car Manufacturers' Strategy 10 16 19 22

Company Profiles - Discover the car fleet identity 2011 Green & Mobility Solutions - A small variety of green responses International Business Deals - Customer tailored services are key Emerging Markets - Are you ignoring business close to home

INDUSTRY

STRATEGY MANAGEMENT 25

FLEET PARTNER

Conflict resolution: Where is the compromise?

GREEN TAXATION IN 2011 28

Car Taxation: Car taxes evolve on the green highway

FLEET EUROPE AWARDS 30

Microsoft: Real value, real results

You can be the next International Fleet Manager of the Year

Ian Hucker, Opel: Upbeat and Optimistic

Urs Haymoz, HAYMOZ Fleet Performance: Performance and transparancy

JosĂŠ Luis Criado, LeasePlan International: Insight and control

Luc Sano, SAAB: Growth in fleet

AUTOMOTIVE 38

Coca-Cola Hellenic: When fleet is lean and safe

Market: The opportunities of the post recession

Fuel: Risk of considerably higher oil price remains

MARKETS

FleetEurope Magazine 53

Lease Accounting: Confusion after global outcry

New Emerging Markets

Car Taxation in Europe

New lease accounting rules

Professor Peter NC Cooke highlights the interest of fleet suppliers in the new markets, especially the BRIC countries (Brazil, Russia, India and China) (page22). He also explains the difficult relationship and correlation in the decision making process of fleet clients (page 25). Furthermore, he told us how fleet clients and their companyâ&#x20AC;&#x2122;s can be touched today and tomorrow by the consequences of economic elements (page 48).

Taxation specialist Bart Vanham gives an overview of the recent evolutions of car taxes and he explains the way they evolve on the green highway (page 28).

Vincent Rupied of Leaseurope and Arval brings an update on the Lease Accounting Reform project and its impact on the fleet business (page 42).

CONTENTS

FOCUS

DIGEST Europe

500 Toyota Auris HSD and 30 Prius for Leche Pascual in Spain The Spanish food giant Leche Pascual has ordered 500 Toyota Auris HSD and 30 Prius to contribute to Madrid's sustainability plan. In the presence of Madrid’s Mayor, Alberto Ruiz-Gallardón, Grupo Leche Pascual presented its first sustainable commercial vehicles. The delivery of 41 Auris HSD is the start of the roll-out of 500 Auris HSD and 30 Prius to its food transportation fleet. This initiative is a result of Leche Pascual’s commitment to sustainable transportation in Madrid. Today, 13% of Leche Pascual’s delivery fleet runs on alternative energy. As of February 2011, the vehicles will also be used in neighbouring municipalities and eventually at all of the company’s branches. The vehicles are

Fleet Logistics Chief Executive Officer Peter Soliman said the results partially reflected the continued depressed economic circumstances in both the United States and Europe.

This fleet of 500 Auris HSD and over 30 Prius represents the largest sustainable commercial fleet in Europe.

financed with the support of Bansacar Autorenting , a service division of Banco Santander. Tomás Pascual Gómez-Cuétara, president of Grupo Leche Pascual, was personally presented by the Mayor a certificate for participating in the “Madrid

Fleet Logistics achieves record performance

Arval service for micro-fleets

European fleet management specialist, Fleet Logistics, has achieved record results in January 2011 adding 10,000 new vehicles to its managed fleet following an array of new contract signings in a variety of industry sectors and countries. The company, which now manages a fleet of in excess of 80,000 vehicles across Europe, signed new contracts in Germany, France, Belgium, the UK, Sweden and Finland to record its highest ever single month’s results since it began trading 15 years ago. The new business wins are with major international fleets, many of them household names and the largest of which operates over 2,500 cars, in a variety of industry sectors including telecommunications, FMCG (fast moving consumer goods), electronics and pharmaceuticals.

In order to respond to the financing needs of independents and very small companies in terms of cars, Arval France has set up a programme called ‘Autoforfait.com’. This is intended to address a situation whereby these ‘micro-fleets’ tend to opt for purchase or rental with purchase option, rather than the long term renting solution used by larger structures. The programme enables clients to subscribe to an ‘all-in’ car fund, giving the option of selecting the brand and model of choice. The very small (or one-man) fleet operator can also choose the service elements required in his own personal package. A dedicated website has been set up for this new product. www.autoforfait.com

FleetEurope Magazine 53

Saab Automobile: new global sales structure

Compensa plan”, by which the almost 200 metric tons of carbon emitted by the 66 conventional Leche Pascual delivery vehicles will be offset by the planting of more than 1,200 trees to enrich the environment.

Saab Automobile announced the introduction of a new global sales structure aimed at enhancing support and communication with its markets around the world. Effective from February 1, Saab Automobile’s new global sales organization is divided into four regions, each led by a regional director. The regions identified in the new structure are: Americas, Nordic, Europe, and Asia Pacific, Middle East & Africa. The Americas region includes the United States, traditionally Saab’s largest market, and will be led by Alan Ludwell, currently responsible for importer markets at Saab Automobile. Magnus Hansson will continue as regional director for the Nordics, where Sweden is the largest market. The Europe region will be led by Jonathan Nash, who leaves his position as managing director of Saab Great Britain. Over the course of the next few months Saab Automobile aims to announce a regional director for Asia Pacific, Middle East & Africa, where China will become the main focus. All regional directors will be based at company headquarters in Trollhättan, Sweden, where they will report directly to Saab Automobile’s Executive Director Global Sales & Aftersales, Matthias Seidl.

Autorola celebrates 10 years of on-line auctions Danish company Autorola is celebrating ten years of on-line car auctions. Although many had believed that buyers need to see a car in the flesh before buying, the success of the concept has proved the contrary. In 2010, Autorola handled over 220,000 vehicles.

Building and facilities management group, Europa Support Services (Europa), has appointed contract hire and fleet management specialist, Fleet Alliance, to manage its 350-strong car and commercial vehicle fleet following an open market selection process. Fleet Alliance was appointed ahead of several other contract hire and leasing suppliers due in part to its online fleet management solution, e-fleet, and its ability to achieve cost savings of around 8-10%. Europa’s commercial vehicle fleet, which is comprised entirely of Citroën Berlingo, Dispatch and Relay diesel models, is used by maintenance management personnel to fulfil contracts at clients’ properties around the UK. Prior to Fleet Alliance’s appointment, a significant proportion of the vehicles were on short term rental agreements of up to 12 months, but all vehicles have now been switched to contract hire

for three years/60,000 miles for the vans, while the cars are also operated for three years but on individually tailored mileage contracts. Fleet Alliance also compiled a new car policy list for Europa employees to provide a selection of “green” vehicles based upon whole life and CO2 emissions.

FLEET PEOPLE

Bart Beckers

Stéphane Renie

Martin Brown, managing director of Fleet Alliance (left) with Greig Brown, chief executive of Europa.

Athlon in Streetscooter move

ALD International has announced the appointment of Stéphane Renie as Sales and Business Development Director of ALD International. He succeeds Olivier Fossion who became Managing Director of ALD Automotive Switerland. Stéphane Renie has more than 15 years experience in sales and marketing within Renault, in France In his new function he will report to Pascal Serres, Deputy CEO of ALD Automotive. Alphabet Fleet Management is undertaking a degree of restructuring within its personnel in order to prepare for future growth. On February 1st Erbehard Schrempf joined the Board of the company. He was previously Head of Sales and Marketing at BMW Bank. At the same time, Emil Karl Sänze, who had been head of sales, left the company. Responsibility for sales is now in the hands of Uwe Hildinger, previously operational in Services.

Athlon Car Lease has announced that it is to become involved in the Streetscooter development consortium. The leasing company is taking a shareholding in this German enterprise, and will be actively involved in research. The consortium intends to design and build an electric car, rather than merely replacing the combustion engine with an electric motor. It was founded in 2009 by RWTH Aachen University, and is working on the domains of battery technology, electric drives and energy efficiency amongst others. The vehicle it is developing has a top speed of 120 km/h and a range of 60 to 130 km, making it suitable for most short journey uses. Athlon is the first leasing company to become directly involved in developing an electric car.

Electric sales - half the market in 2040? According to a survey carried out by the Oliver Wyman bureau, 40% of all new vehicle sales are set to be electric by the year 2040. The figure may even be as high as a half in Europe. The bureau believes that the market will not really take off before 2025 at the earliest, but that this ‘take-off’ is inevitable. Before this date, it does not think that plug-in electric vehicles will achieve more than a 6.6% market share, representing a little over 3 million vehicles worldwide. Hybrids are set to rise to 8.8% during this

Arval UK has announced that Bart Beckers will become the new CEO. Jean-Marc Torre will hand over his role as Chief Executive Officer after five successful years to join Bank of the West. His successor Bart Beckers has strong experience in Operational Leasing, having spent the last 15 years with LeasePlan. He was Managaing Director of LeasePlan in Belgium, before joining LeasePlan in France. Most recently he was chairman of the LeasePlan entities in France.

‘interim’ period. And legislative interventions such as higher taxes on combustion engine vehicles in cities are not to be discounted. Jose Luis Criado-Pérez

LeasePlan Corporation N.V has announced that it has appointed Jose Luis Criado-Pérez to the position of Managing Director for LeasePlan International B.V. The appointment became effective on 17 January 2011. His previous position was as Chairman of Consultores y Asesores en Renting, S.L. (C.A.R.) and he has also held the post of Managing Director for American Appraisal in Portugal and in Spain. You can read the exclusive interview at page 46.

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Europa selects Fleet Alliance to supply and manage fleet

FOCUS Car Manufacturers' Strategy

Optimism and enthusiasm lead to creativity “The times, they are a-changing”, Bob Dylan sang in the Sixties. Fifty years on, that much at least still is true. It also applies to the automotive and fleet industries. More than ever before, the manufacturers concentrate all their efforts towards durability, and lowemission vehicles. This ‘green’ trend is aimed at all clients, private and corporate, but it’s obvious that the main thrust of innovation is happening in business fleets. After a few difficult years, the fleet sector seems to have regained a measure of enthusiasm that is promising to turn 2011 into a very interesting fleet year. Especially now that manufacturers are managing to reconcile sustainability, performance and driving pleasure CAR MANUFACTURERS’ with each other. In this dossier, you’ll find an COMPANY PROFILE overview of the manufacturers’ development The Fleet Identity 2011 10 strategy, of the way they organise their international fleet cells, and of the respective fleet GREEN & MOBILITY ambitions for this year. A small variety of green responses 16 Steven SCHOEFS

INTERNATIONAL BUSINESS DEALS Customer tailored services on the way

EMERGING MARKETS Are You Ignoring Business Close to Home?

FleetEurope Magazine 53

Designed yesterday, developed today, taking your places tomorrow?

COMPANY PROFILE

FOCUS Car Manufacturers' Strategy

Company Profiles

Discover the Car Fleet Identity 2011 All of the major car manufacturers are looking to combine an increase in their fleet business with a growing focus on cleaner technologies, clearly including hybrid and electric models. Here, some of them tell us how they see the various market places developing, and what their brands have in store for us over the coming year. Steven SCHOEFS

Škoda Company & Network

Products & Services

International expansion

The SME concept and strategy Škoda has been developing together with its main EU5 countries is currently being adapted and soon Škoda will implement this into other countries as well.

n Fleet Strategy in 2011 1. Development of Sales processes (KPI and Reporting and lead / client management) in the dealerships. 2. Sales skills (importer and dealer level – i.e. SMEsalesman) to professionally acquire and service fleet customers. 3. Product and tools to support the above. 4. Launch in EU5 and gradual integration of further countries.

It is mainly inWestern European countries that Škoda is pioneering all new activities in terms of Business and Sales development. At this point the main development of the SME activities takes place in EU5 +, Portugal, the Netherlands, Belgium, Denmark and Sweden.

Škoda Octavia Green Line

What does Škoda consider to be the next big thing in international fleet business? Large international customers are reducing the number of brands in their car parks to reduce complexity. They also require a “single point of contact” concept to deliverer and manage more than one or two brands.

Mercedes-Benz Company & Network 2010 was a successful year for Mercedes-Benz with significant growth rates in many important markets. The German brand has ambitious plans for 2011: the goal is to surpass the sales record set in 2007 and achieve the best year in the company’s history. For fleet sales growth Mercedes-Benz expects opportunities especially in the emerging markets where global and national enterprises are currently building up their fleets. In Europe they also expect growth through the introduction of new models including the new B-Class, which will complement the current fleet range.

PRODUCT & SERVICES n New models in 2011 To accompany the launch of the brand new CLS in January Mercedes-Benz is also adding improved powertrains to the E-Class further reducing the CO2 and TCO figures. From March the new generation C-Class likewise offers significant TCO improvements, for example the new C 220 CDI BlueEFFICIENCY has a CO2 value of 117 g/km as well as the best interior in the class and is now accompanied by the all new C-Class Coupé. 2011 will also see the launch of an all Mercedes-Benz C Class Coupé

new SLK and M-Class which will benefit from new highly efficient engines. Later in the year MercedesBenz will launch the first of the new range of cars in the compact-vehicle segment. The all new B-Class signals the first of four new models in this segment. This all new car will ideally complement and broaden the current product range to make Mercedes-Benz even more attractive to fleet purchasers. n Fleet Focus in 2011 The C- and E-Class models have been predominant as popular fleet vehicles for many years and to stay at the forefront Mercedes-Benz cannot stand still. n Fleet Strategy in 2011 Mercedes-Benz has a well developed infrastructure with market centric fleet programs in all major countries catering to fleets of all sizes. As the fleets reach medium to large size for the local market they will have the support of a professional fleet contact equipped with the resources and tools one would expect from Mercedes-Benz. The international customers are served from the headquarter in Stuttgart. The 2011 strategy is to ensure that Mercedes-Benz maximizes this already strong infrastructure to be the best in the industry at serving the customers needs through excellent professional relationships and the ability to meet

the individual needs of the most demanding customers. To support this strategy they are able to offer fully integrated solutions from one source. Through the creation of a specialist team covering vehicle acquisition, financial services, fleet management, spare parts supply and replacement vehicles Mercedes-Benz can now offer very complete tailor made offers to customers requiring a one-stop-shop solution.

International expansion Mercedes-Benz will lay the main focus on the growth markets, especially the BRIC countries. In addition they expect to boost sales in the U.S. The new products such as the C-Class or the SLK will also make their contribution to the positive development. The emerging markets are also main focus markets for fleet sales growth where they are maximizing opportunities as global and national enterprises are currently building up their organisations. For example in the BRIC countries, South Africa and Australia, many companies are currently establishing vehicle fleets and the national Key Account Management teams are actively acquiring new customers and provide additional support for existing customers as they expand.

What does Mercedes-Benz consider to be the next big thing in international fleet business? More and more countries will limit CO2-emissions and introduce taxation schemes heavily based on CO2 emissions. This development has started already in countries such as France and Great Britain and will probably continue throughout Europe in the upcoming years. Many car manufacturers cannot respond to these new challenges adequately and in time. It the goal of Mercedes-Benz though to help the customers deal with this situation without passing on significant cost increases.

COMPANY PROFILE

Citroën Business International Company & Network In 2010, Citroën sold 1,460,000 cars, which represents a growth of 8% compared with 2009 when 1.369.573 cars were sold. In Europe, Citroën sold 1,045,142 vehicles in 2009. In 2010, the brand became the No 6 on the European market and the No 3 on the LCV market in Europe. Regarding B2B sales, Citroën sold over 325,000 vehicles in 2010 and signed more than 170 international contracts.

Products & Services n New models in 2011 Following the unprecedented success of Citroën DS3 and the excellent launch of Citroën C 4, the brand is following its product strategy, based on a complete and attractive range, with the distinctive DS Line. Two

Citroën DS4

new models will complete this line: Citroën DS4 in May and Citroën DS5 in October 2011. n Fleet Focus in 2011 ‘Französiche golf’ (The French Golf) : a recent title of a German newspaper about the new Citroën C4 is a good “résumé” of the New Citroën C4. This car is perfect for fleet. Its qualities have been saluted by the European automotive press (roadholding, equipment, comfort, motor…). The new Citroën C4’s handling combines responsiveness and comfort and has all the new safety and comfort equipment. Furthermore, the e-HDi micro-Hybrid technology is available on the Citroën, reducing fuel consumption and CO2 emissions. n Fleet Strategy in 2011 Meeting the needs of all fleet customers, with expanded Business Center Network, expanded

National Key accounts and back office resources, the International Corporate Sales team, Business Line product offer in all markets, additional services for fleet customers, including CO2 analysis and mapping, and improved servicing offers. Last year, Citroën continued to deploy the strategy launched in 2009 with a clear increase in focus on the B2B market.

International expansion China is the main priority for Citroën. It is the second market for the brand in sales volume (16% of Citroën sales). In 2010, Citroën sold 224,000 vehicles in China and the market share reached 2%. Citroën has the objective of continuing with these sales dynamics. The B2B market share in China is 3%. We also plan to increase our sales in Brazil and in Russia.

What does Citroën consider to be the next big thing in international fleet business? Flexible mobility solutions, including a combination of state of the art thermal engine vehicles, hybrid vehicles, and full electric vehicles, in addition to alternative transport solutions. It is worth noting that Citroën will launch the full hybrid diesel DS5 in 2011, another concrete example of additional solutions. Another example is the “MULTICITY” service, an innovative new mobility offering. For example for long journeys C ZERO customers may, with a simple click or call, choose an alternative vehicle from the full Citroën range corresponding to their actual needs. The vehicle will be delivered to their home.

Infiniti Europe Company & Network In 2009 Fleet sales were mainly B2B. B2B sales remained stable in 2010 in Europe. Increase in sales came from a big push on leasing activities, helped by very competitive residual values in nearly all markets. Infiniti M 35 h

Infiniti will keep the growth going in 2011 with a consolidation of the leasing companies and a development of B2B sales.

Products & Services n New models in 2011 Infiniti is launching its first Hybrid as part of the latest model: the M35h with a CO2 at 162 g/km. This car will develop 360 bhp. n Fleet Strategy in 2011 Infiniti is presented to all international key accounts as the Premium brand of the Alliance Renault/Nissan; Infiniti, Renault and Nissan are included in one single international contract with majors leasing companies.

Locally Infiniti has has implemented fleet standards in the network to help to professionalize its network. 2010 has also been the year Infiniti has introduced the brand with all the majors companies in the leasing industry. In 2011 Infiniti will keep its momentum with the fleet industry and improve its TCO positioning. In addition versus last year Infiniti will develop a strong B2B program.

International expansion Infiniti launched its activities 2 years ago in 15 countries in Europe. Every single one is developing very strongly. In 2011 priority on Fleet sales will focus on G8 countries.

Honda Europe Products & Services

2010 sales in the Europe Region for Honda were just over 198,000 units and there is projected growth through 2011. For 2011 Honda has extended the Hybrid range to four vehicles, the Honda Civic Hybrid, Honda Insight, Honda CR-Z sports Hybrid and the Honda Jazz Hybrid. The new Honda Jazz hybrid was one of the star acts of the last Paris Motor Show and it is the world's first ever hybrid in the B segment. Lightweight IMA hybrid technology remains crucial to Honda's corporate offering of low emission cars to the business sector. It's a technology where Honda remains a key leader after it first developed the system for the Insight two-seater coupe in 1999.

n New models in 2011 In addition to expanding the Hybrid range, the latest low-emission 2.2 i-DTEC engine will appear first in an updated version of the stylish and spacious five-seater Accord Saloon and estate Tourer models. In addition to its newly revised appearance and more efficient diesel engine, the 2012 Model Year Accord range has been extended to include the more accessible Comfort trim, offered for the first time with the low emission 2.2 i-DTEC engine. The Honda Accord is also available in Elegance and Executive trims.

Honda Accord

n Fleet Strategy in 2011 Over the past 12 months Honda has expanded its key account base forming partnerships with a number of key Pan-European customers. Honda’s growth has been achieved through a real desire to review tender opportunities and see where Honda can realistically meet customers’ needs and objectives. This has been mirrored by a continued growth in focus in local markets where Honda continues to establish a programme that delivers a sound basis for future growth. In terms of fleet supply all vehicles are supplied through the dealer networks, for larger customers Honda has a growing number of Fleet Specialist Dealers.

What does Honda consider to be the next big thing in international fleet business? Over the last couple of years Honda has seen the gradual beginnings of the electrification of vehicles lead by hybrid but now encompassing a wide range of technologies. These technologies will find their ways into the largest fleets and the challenge will be to adapt and exploit the technologies available. In terms of future fleet thinking, it’s now time to think of the fleet as just one part of a mobility and communications strategy. An integrated approach to this will have a meaningful impact on developing future policies and meeting CSR commitments.

FleetEurope Magazine 53

Company & Network

COMPANY PROFILE

FOCUS Car Manufacturers' Strategy

Renault Company & Network Last year, the registration level increased by 25% on the Western European fleet market (within a global fleet market which increased by 8%). Renault aims at maintaining the market share in 2011, which will be linked to market evolution.

Products & Services n New models in 2011 The launch of the complete range of the new Master (passenger cars & short wheel base LCV version) will reinforce the Renault leadership in Europe on the LCV market up to 3.5 tonnes. The launch of the new LCV range is accompanied by

the launch of Renault Pro + in additional countries. This is a bespoke network dedicated to business road users. It delivers a tailor-made service geared to the demands of its customers ‘respective activities. The 2011 schedule year will see an acceleration in the network‘s international expansion, both within and outside of Europe. Thanks to the launch of the new Laguna & new Latitude models end of last year, Renault will extend the range width and consequently the fleet commercial opportunities among current customers and new prospects. Renault Latitude, in particular the brand's latest high-end saloon model, delivers a high number of comfort and journey enhancing features. Aimed at customers who value quality and comfort in every sense of the words, Renault Latitude places the accent very much on the well-being of its occupants. 2011 will be the first launch year of electric models, two derivatives of internal-combustion vehicles:

Renault Fluence Z.E., an electric version of Fluence which will initially be available in Israel and Europe. Renault Kangoo Z.E. will be an electric version of Renault Kangoo Express, intended primarily for fleet and business use. Pre-ordering linked to attractive prices has already been opened for both models, whose launch will be completed at the end of 2011 by the launch of Twizy, a new model whose architecture is designed to run exclusively on electric power.

International expansion Renault will put the focus on the European fleet markets, whose sales represent around 70% of fleet sales. They are also pursuing the fleet structure development in the countries outside of Europe, in order to efficiently respond to corporate and local fleet customer needs and contribute to an effective implementation of our international agreements. The share of the fleet sales outside Europe should progressively grow.

What does Renault consider to be the next big thing in international fleet business? Renault Fluence Z.E.

Mobility offers and sustainable development policies adapted to fleet customers requirements based on TCO reduction are the main key business values for the international fleet business.

Peugeot Company & Network As proof of the dynamism in 2010 Peugeot confirms an all-time world-wide sales record of 2,142,000 units, supported by the acceleration of the international offensive, the rapid deployment of new service offerings, the new Style Identity and the launch of 4 products out of the 14 scheduled by 2012. In terms of the plan to develop B2B sales, Peugeot announces that 450 business centres have been implemented and that already contracts with 200 international customers have been established compared to 33 in 2009. This has contributed to the spectacular growth of our B2B market share in Europe by 0.9 percentage points up to 8.1%. Peugeot’s aim is to keep increasing the portfolio of customers and the sales as well as to provide first class account management. The objective for 2011 is 8.3 % market share in the real Fleet Market in Europe (LCV and Passengers cars). Peugeot 508

Products & Services n New models in 2011 The first deliveries of the full electric Peugeot iOn represent a very important milestone for Peugeot and for the whole industry. The launch of Peugeot 508, in China and Europe, will be the event of the first quarter of 2011 in the M2 segment. The car is sure to be a real B2B best seller which has been conceived taking into account the TCO of the car at every step of the project. In terms of engines – first on 508 and then on the new version of 308 – the Stop & Start E-HDI engines are going to be available and will decrease the CO2 emissions of the Peugeot vehicles by some 15%. Finally, Peugeot is going to launch the first Diesel Hybrid engine combination on 3008 during the second half of 2011, and it will then cascade the E-HDI technology to the whole brand. n Fleet Strategy in 2011 Last year the newly created Peugeot Professional teams focused on convincing new customers that

Peugeot has a relevant solution for their fleets. In 2011, the International and National teams will concentrate most of their time on developing the partnerships formed in 2010, consolidating the links with new customers, understanding their needs, providing them the added value they expect.

International expansion After Europe, China and South America are two very important markets for the Peugeot B2B strategy in 2011. In Europe the focus will be to professionalise all countries and to implement 600 Professional Centres. The coaching of all B2B sales people and the B2B Service department will be a key factor for responding to the needs of B2B customers. We will be as close as possible to the customers to satisfy them 100 %.

What does Peugeot consider to be the next big thing in international fleet business? The successful implementation of electric vehicles into corporate fleets is definitely the next big thing jointly with, obviously, the way the Chinese market will welcome the B2B approach and range of products…

SEAT

Seat Exeo

Company & Network

Products & Services

SEAT’s target is to move to a total sales figure of 387.000 vehicles in 2011 versus 339.000 vehicles in 2010. In Corporate sales SEAT increased the volume in 2010 with 26% in comparison with 2009 and this year they aim a new increase with 20%. To ensure maximum service to the customer, SEAT has developed a network of Fleet Specialized Dealers. SEAT signs international agreements through Volkswagen Group Fleet International, but for SEAT the motto “Think global act local” remains crucial on the international level.

n Fleet Strategy in 2011 This year SEAT has the new automatic version of EXEO and EXEO ST. There is also the launch of the Ibiza Commercial, with 930 litres of boot space. By the end of the year SEAT will enter in a new segment launching a new “Small urban car” offering best in class CO2 emission levels and fuel consumption.

COMPANY PROFILE

Volkswagen Company & Network The Volkswagen strategy is defined with Mach 18, within which Volkswagen has to be the most innovative high volume brand. This strategy is valid for all profitable customer segments.

Within this context the European market is the region which needs to be defended with other markets such as China or India providing the most powerful opportunities for growth.

Products & Services n Fleet Strategy in 2011 Volkswagen will continue its strategy of 2010. This means that Volkswagen continues to offer vehicles

which meet customer needs in terms of technology, competitive TCO and, last but not least, emotions. Two important flagships for the fleet business are the recently launched new Passat and also the new Jetta. In combination with BlueMotion Technology Volkswagen offers to customers a combination of the lowest CO2 and fuel consumption in the car industry but also exciting driving experiences.

What does Volkswagen consider to be the next big thing in international fleet business? Volkswagen continues to launch an exciting range of new models each year, and 2011 will not be an exception from that.

Volkswagen Jetta

Land Rover - Jaguar Company & Network To the year ended March 2010, Jaguar sold 51,000 vehicles globally, Land Rover 157,000. X-TYPE ceased production in 2010, a car that had made up 33% of Jaguar total sales volume in Europe in 2009. Despite this Jaguar sold 27,400 vehicles in Europe in 2010 compared to 29,800 in 2009, with an increase of sales for XF of 20% year on year. The XF and the successful launch of XJ contributed to an enhanced performance for Jaguar Land Rover in 2010. Land Rover sales in Europe increased from 69,500 to 83,400, a 20% rise. Defender sales were broadly conNew Range Rover Evoque

sistent year on year, Freelander saw an 18% increase in sales, Range Rover Sport a 27% increase, Discovery 29% and Range Rover 26%.

Products & Services n New models in 2011 Since its launch the Jaguar XF has received widespread critical acclaim, winning over 60 international awards. This year Jaguar will introduce a small diesel engine to the model line up with competitive CO2 emissions, fuel economy and power output. Thereâ&#x20AC;&#x2122;s also the launch of the Range Rover Evoque in 2011. Pre-launch focus groups across Europe have given it a resounding seal of approval and this is now translating into demand across Europe. Land Rover believes sales will exceed the initial estimates, because Evoque presents a compelling proposition to fleets with CO2 emissions from 129 g/km and fuel economy from 5.0 ltr/100 km in the combined cycle. n Fleet Strategy in 2011 In 2011 Land Rover - Jaguar is launching cars/derivatives that are targeted at the heart of the executive

segments. They will continue to do so over the next few years. Consequently, they will adopt a balanced and measured approach to the fleet market working in partnership with rental, leasing and end user companies. In addition to this, Land Rover is the vehicle of choice for a significant number of governments and industries where there exist specialised functional car requirements.

International expansion Jaguar and Land Rover expect to grow their business significantly in 2011 with the launch of new products to the market. The larger markets in Western Europe will remain important and provide the strongest growth opportunities. Central and Eastern European markets are receiving increased focus but are expected to show lower growth due to the fragility of their economic recovery process. Outside Europe, key markets in 2011 will be the United States, as always, with China continuing to increase in importance.

Volvo Volvo is looking at a very positive 2011. They are planning to have growth compared to 2010. This growth will come from both retail and fleet sales.

Products & Services n New Models in 2011 The recently launched S60 and V60 DRIVe variants provide uncompromised driving dynamics, very competitive cost of ownership while delivering CO2 figures of 114 and 119 grams. Later, Volvo will also launch the new C30 Battery Electric Vehicle, a car which embodies the Volvo core values of safety, quality and environmental care. Volvo will continue to improve the emis-

sion outputs of their engines and find ways to lower operating costs for fleet customers.

an international agreement is second to none, a fact backed up by the high customer retention rates.

n Fleet Focus in 2011 The new Volvo S60 DRIVe. Placed within the competitive C/D premium segment, this car delivers what the corporate market wants : driver appeal, supported by low CO2 emissions (below 120g/km) and class leading safety. Features such as City Safety, with Auto brake, assist the driver and can help reduce accident costs. n Fleet Strategy in 2011 The International Fleet Strategy of Volvo celebrates its 25th birthday. In 1985 Volvo established the first International Fleet Operation to provide one point of contact for multi-market fleet agreements. The experience and the infrastructure to deliver and implement

International expansion Volvo sees growth in Europe and the USA, where they see also many opportunities. The continuous improvement in lowering the CO2 output, increasingly makes the Volvo products more attractive to the corporate marketplace and wins new customers across the world. In addition, the recent acquisition by Zhejiang Geely Holding Group gives Volvo a greater insight and a strong platform into Asia, particularly China, where Volvo aims to grow both the retail and fleet sales segments.

What does Volvo consider to be the next big thing in international fleet business? Volvo believes that alternative fuels, electric cars and diesel hybrids, as well as continuity of the CO2 focus and further improving fuel consumption will be very high on the agenda. It is important for all parties involved to reduce carbon footprints, and reduce the overall cost of the fleet, while at the same time looking after the environment and our children's future society. Volvo S60

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Company & Network

FOCUS Car Manufacturers' Strategy

Green & Mobility Solutions

A small variety of green responses No discussion on the future plans of car manufacturers can take place without taking into account – or even putting a primary focus on – the environmental question. We asked the manufacturers to tell us how their brands are thinking and what they are doing. The answer is a small variety of sustainable solutions and plans.

Tim HARRUP

ll of the major manufacturers have specific thoughts and actions about how to tackle the environmental question, and these range from an overview of what society needs, to action taken within their own ranges. Volkswagen starts by stating that it has always been a technical pioneer for sustainable innovations which provide real benefits to the customers. Ralf Kostrewa, Head of International Fleet, Rent-a-Car and Used Cars, says: “We will continue this strategy. It is important to Volkswagen is to meet both challenges, the optimisation of existing technologies based on diesel or petrol, which finds

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Today, almost every car manufacturer is driving on the green highway, but the direction can be different.

its benchmark in the one litre car, and providing an electric vehicle which is ready for the daily usage, and not just a green story. This will become real from 2013 on.”

The challenge and the cost On the question of future challenges and how to tackle them, Volvo believes that reducing greenhouse gas emissions is a global concern that requires global solutions. As a small car maker (in its own words), Volvo Cars states that it aspires to be at the forefront in innovation and new technologies to cut CO2 emissions in transport. But it remains a challenge for

all car brands to invest in developing green technologies in the absence of global standards, incentives and legislations to adhere to. On top of this, cutting edge innovation through electrification of mobility comes at a cost. Javier Vásquez, Director, International Major Accounts, continues: “We need to understand who will pay for what is essentially a common good – the welfare of our planet. Additionally, we must continue to have a broad perspective and not view transport in isolation. An example within electric vehicles is how to ensure that the electricity used to charge the car is derived from renewable energy sources.” These challenges, he says, cannot be tackled single-handily by a single car brand. It is necessary to work together with different partners and create new solutions and ways of thinking. An example he gives is Volvo’s own joint venture with energy supplier Vattenfall, in order to develop a plug-in hybrid vehicle to be introduced to market in 2012. And in the eyes of Škoda, there can never be enough done for the environment. The company says that it believes that in the future new technologies will be developed in order to reduce CO2 and support various alternative power supplies. Nevertheless, it predicts a long run which will have to face many problems as every new technology does when it is being implemented. In model terms, Škoda says that its latest product in the field of low CO2 technology is the E Octavia – the first Škoda ‘Elektromobile’ currently preceded in European fleets by Skoda’s new GreenLine portfolio. The brand’s complete model range is now available in GreenLine version with a lowest CO2 of 89 grams from the Fabia

Significant reductions Looking at actions to be taken within its own ranges, Renault says that its all-new 1.6 engine – ‘Energy dCi 130’ – will be the most powerful engine on the market with this capacity and offer the best emissions/power ratio in its class. To be available on the Scénic and Grand Scénic from May 2011, it will reduce CO2 emissions by 20% compared with the previous generation. And Robert Boscari – Renault Director, Fleet Sales & Marketing – Corporate Sales Division, adds: “Renault’s new Energy TCe gasoline engines will cut CO2 emissions for vehicles in the A, B and C segments by around 30% (or 40 g/km of CO2 and one litre less fuel per 100 km)”.These innovations are set to help reduce CO2 emissions significantly. From 137 g/km today, Renault’s range in Europe will therefore emit an average of less than 120 g by 2013 and less than 100 g by 2016 when electric vehicles come into the equation more substantially. Peugeot Professional International Director Pierre Garnier points out some of his brand’s actions in this domain: “Peugeot will soon have an even larger range of cars that can offer very low CO2 and driving pleasure simultaneously. For example, the 3008 Hybrid 4 has a superb driving experience, and at the same time, four wheel drive, and a zero emissions mode. This should help address the issue by clearly showing driving pleasure can still be enjoyed, while at the same time, having a low CO2 car”.

Widening the approach Honda believes that it is time to look beyond the car alone. There is no reason to believe, it says, that businesses will

continue to be restricted to four wheels. As society’s ideas of mobility change, so will its demands for vehicles. In Brazil, Honda points out that it has already developed a flex-fuel motorbike that can run on a flexible mixture of environmentally sound bio-ethanol and petrol. The CG150 Titan Mix is the first motorbike to be equipped with emissions-reducing flex fuel technology. Mercedes too takes a multi-faceted approach. Hans-Georg Lutz, Senior Manager International Corporate Sales: “On our way to emissions-free mobility we commit ourselves to an integrated strategy that has led to ground-breaking technologies such as diesel (BlueTEC) or petrol aggregates (BlueDIRECT), for our fuel-efficient models, as well as electric power trains with battery (E-CELL) and fuel cells (F-CELL).” And Citroën’s Head of Fleet Sales David Staniforth, explains what his brand has been doing in this respect: “Citroën has already begun to develop green tech-

nology, such e-HDi micro-Hybrid technology and will follow on this path for the next three years with a Diesel Hybrid 4 (Full Hybrid) in the range. On top of this, electric vehicles are a reality at Citroën with the launch of the Citroën Berlingo First Venturi and C-ZERO. Our strategy is to offer multiple solutions to environmental challenges facing the planet.” He goes on to point out that cutting CO2 emissions is a key requirement, stating that the challenge is to continue CO2 reduction actions, in relation with his company’s involvement in the area of sustainable development. To tackle these questions, Citroën is to take action in several areas including weight control, power-train technology and aerodynamics. The pursuit of useful technological innovations and solutions, believes Citroën, will allow breakthrough progress in the environmental impact of cars. n

Advice We asked our manufacturers’ representatives to give a piece of advice to fleet managers. Here is a selection of replies. CITROËN: “Choose a partner for the long term with appealing state of the art technology, exciting products and a global presence. Your fleet partner must be able to meet your fleet needs, now and tomorrow.” (David Staniforth) HONDA: “I don't believe a one-size solutions fits all fleet requirements. Ordering a batch of just one model might deliver purchase savings on paper, but in terms of operation, are the cars fit for purpose and do they meet the company's CSR requirements?” (Harvey Hughes) MERCEDES-BENZ: “Your choice of car brands should reflect the goals of the company, whilst satisfying the TCO budget, the environmental targets and at the same time providing your drivers with a safe, reliable and rewarding car to drive.” (HansGeorg Lutz) PEUGEOT: “Just don’t think about “the fleet” anymore. Think about your employees’ use of mobility independently of the fact that they are allowed or not a company car. The idea is to optimise this Corporate Mobility.” (Pierre Garnier) RENAULT: “Select a structure allowing the customer to be fully supported in their own international development. Select a vehicle range highly competitive in terms of price, total cost of ownership and CO2 emissions. And also quality and safety items have to be taken into consideration in the car brands selection.” (Robert Boscari) SEAT: “To choose a range of reliable, sustainable and excellent TCO vehicles is not enough. Car manufacturers must commit themselves to the highest quality of service to simplify fleet management.” (Elena Delgado) VOLVO: “A company car is becoming more and more an extension of the company image and values and it is important that companies look for manufacturers that represent 21st century values : modern design, care for the environment, safety, quality and premiuness.” (Javier Vásquez)

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GreenLine. The same story with sister brand SEAT. “Sustainability is one of the most important words in our philosophy”, says Elena Delgado, Head of Fleet Sales & Remarketing at SEAT. “Having 23 of our engines producing less than 120 g/km of CO2, makes us one of the most sustainable brands on the market. We are constantly looking for ways to maximise our range efficiency without compromising on the lifestyle and driving pleasure we are used to. Our best in class Ecomotive engines are setting CO2 emissions records, like the Ibiza with 89 g/km or the Leon with 99 g/km.”

FOCUS Car Manufacturers' Strategy

International Business Deals

Customer tailored services are key The value of fleet sales to car manufacturers is enormous. And as the criteria fleet managers are required to take into account evolve, so do the strategies of these manufacturers to their largest clients. We asked a number of major brands to tell us what they are doing for fleets. Tim HARRUP

hatever other factors come into consideration when companies make their fleet choices, in the end it is all about cars. So the way in which the various manufacturers reflect and act on their fleet clients’ needs is crucial.

Expansion In terms of expansion of its fleet policies, Renault is, for example, developing fleet structures outside Europe, and especially in Latin America, Eurasia, Asia and Africa. This is partially in response to client requests to have an extended coverage within fleet activities. For Renault this is the best way to develop international agreements with clients who require worldwide offers.

Although part of the Renault-Nisan alliance, Infiniti is a relative newcomer to the European fleet scene, and thus to its international customers. Infiniti is positioned to international key accounts as the Premium brand of the Alliance. Within this context, it has over the past year implemented fleet standards in the network to help to professionalise its network. In 2010 Infiniti also took steps to introduce the brand to all the majors companies in the leasing industry, and 2011 will see the brand maintain its momentum with the fleet industry, improve its TCO positioning and develop a strong B2B program.

Professional Centres in each country (total of 600 centres). These involve specific standards, for example specific B2B salesmen trained by the brand, a service division with specific services for B2B including opening hours and replacement cars, demonstration and test cars and B2B marketing and communication. All standards will be controlled a minimum of once a year by an external audit. And for its part, Europe’s leading sales brand Volkswagen says that it will continue to offer vehicles which meet customer needs in terms of technology, competitive TCO and, last but not least, emotions.

Agreements The organisation of Peugeot’s fleet strategy involves having its Peugeot

International fleet agreements form an important part of the fleet strategy equa-

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International fleet agreements become an important part of the car manufacturers’ fleet strategy equation.

FOCUS Car Manufacturers' Strategy

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In terms of expansion of its fleet strategy, Peugeot is developing an international fleet structure with dedicated Peugeot Professional Centres in each country.

tion. Mercedes-Benz has now more than doubled the number of International framework agreements in the last 24 months. The brand has seen an increasing tendency for international customers to centralise their procurement processes, including vehicle needs. “Many European and worldwide tender requests”, says Senior Manager International Corporate Sales HansGeorg Lutz, “ have led to an increase for international framework contracts with manufacturers and leasing companies. In recent years Mercedes-Benz has been able to acquire many international customers through tender requests and as our product range continues to become broader, more attractive and CO2 efficient we are expecting this trend to continue”. In the same way Jaguar expects to grow its business significantly in 2011 with the launch of new products to the market. "In 2011 we are launching cars/ derivatives that are targeted at the heart of the executive segments. We will continue to do so over the next few years. Consequently, we will adopt a balanced and measured approach to the fleet market working in partnership with rental, leasing and end user companies", adds Peter Brown, Director JLR Operations Europe. Honda too has been expanding its key account base over the past 12 months forming partnerships with a number of key pan-European customers. “Our growth has been achieved through a real desire to review tender opportunities and see where Honda can realistically meet our customers’ needs and objectives.

This has been mirrored by our continued growth in focus in local markets where we continue to establish a programme that delivers a sound basis for future growth”, explains Harvey Hughes, Manager, European Corporate Operations. All vehicles are supplied through the Honda dealer networks, and for larger customers we have a there is now a growing number of fleet specialist dealers. Where international agreements are concerned, Volvo puts these into perspective: “We currently have over 100 International agreements and aim to add more during 2011. We have a clear view within Volvo that signing an international agreement is the smallest part of the equation. The real difference, where we deliver, is at implementation,” explains Javier Vasquez, Director, International Major Accounts. The Volvo organisation states that it is fully committed to ensuring it provides the benefits that an international customer should expect from a premium manufacturer when signing an international deal, namely most competitive products, class leading services and full account support on an international and local level.

TCO When considering fleet strategies, TCO is never far from the top of the agenda. On the question of developments for reducing TCO, Skoda’s Director of Global Fleet Rainer Mielke is quite clear: “We are in direct contact with main market influencers, we regularly conduct TCO studies and adapt the results to our new models, and we are doing our

best to hear the voice of the market to develop most competitive product in the fields of TCO and RV. In order to influence these we are working to improve functionality, design, image and CO2 emissions”. Citroën, also has specific TCO targets for all new vehicles with a dedicated organisation. The Citroën Business International and CVOI teams are fully involved from the start of all vehicles development programs. Specific TCO targets are set, and monitored along with all other vehicle targets. Citroën also has a dedicated international and national fleet organisation, and a full range of services tailored to the needs of fleet customers. It has developed tools such as Active Fleet Data dedicated to fleet management, in order to meet fleet needs. At SEAT they know that choosing a fleet partner is not easy and therefore their strategy is focusing on four factors that matter fleet customers the most: Reliability, Eco credentials, Service and TCO. “SEAT's comprehensive Residual Value Management combined with Volkswagen Group technology and quality ensures best in class TCO”, says Elena Delgado, Head of Fleet Sales and Remarketing. “To further increase its competitiveness SEAT has introduced the Long Life Service, a new maintenance system with flexible intervals in order to adapt the maintenance to the individual driving style and user characteristics.” It is quite clear that the specific demands of the fleet industry, as companies try to balance the many different corporate and human factors which come into play, are of the utmost importance to the major manufacturers. A car may be a car, but it is also an expenditure, a working tool, a part of Corporate Social Responsibility, an emotional possession… And when hundreds or thousands are involved in one company, with hundreds or thousands of drivers, getting it right is in everybody’s interest. n

FOCUS Car Manufacturers' Strategy

Emerging Markets

The difficult orientation of car manufac New business development a long way from home, especially when those new markets could be almost infinite, is much more exciting than looking closer to base, at ones’ own doorstep, for developing and new clients and new sales.

Professor Peter N C Cooke

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Almost every international company is eyeing up the BRIC markets – like Russia – but keep in mind that a new market with a novel business concept may take time to accept the new idea.

lmost every company in our industry is eyeing up the BRIC markets – Brazil, Russia, India, China with their almost infinite business growth potential. But are there better, albeit more modest and less risky growth and profit opportunities waiting to be harvested relatively close to home?

While the BRIC markets may offer the biggest opportunities longer term, what risk do they pose? There is always an enhanced risk with a new opportunity in taking a new product or service into a new market that has little or no experience of providing or buying that service. It can be fraught with problems. Are there less risky opportunities that one might develop shorter term while the magic BRIC markets come to terms with our type of product and acquainted with the European business vehicle model? If one is risk averse – or even cautious, then read on. Many business strategists claim ‘first into the market gives a real strategic advantage’ – yes it probably does, but at what risk and cost? A new market with a novel business concept – fleet management or leasing for example – may take time to accept the new idea. Equally, there is the necessity of understanding the local culture and business climate, competition, identifying and perhaps helping to grow service support and then finding new customers. If your existing customers expect you to enter a new market to provide them with service support, that is a different matter – you have a customer you understand and you can develop together. BRIC markets are huge in volume terms – geographically too – a quarter of the

cturers CEE markets will certainly be different to the EU15 markets; vehicle requirements may be different; income levels and costs may be lower; dealers less experienced in terms of supporting fleet business. Used vehicle disposal may raise issues – in some markets lessors almost routinely move end of lease vehicles to other countries for disposal because used car markets are not yet mature enough ot have the volume capacity to absorb ex fleet vehicles.

And what about the CEE?

The checklist in Figure 1 highlights some of the issues which might need to be examined when considering new business development in as yet untapped markets. Think about the services you might seek to provide if you open a new market closer to home, and perhaps less glamorous than the BRIC markets. Your clients are presumably specialists in areas other than fleet management – that may give you the opportunity to provide a wider range of services in the new markets than in existing markets. You can take over the whole provision of personal business mobility for them. Certainly part of that service will need to be subcontracted to ,local suppliers – or to your existing outsourcers which may already be operating there. However, a package for a CEE market, or indeed for all of the CEE markets, may well prove less complex to provide than seeking to provide the same levels of support in a BRIC market.

Where else might one look for real new business opportunities? The CEE markets may well be an interesting proposition if your business is not already there. Essentially the old Warsaw Pact countries, they are now moving forward with increasing economic confidence. With the exception of Poland, none of them are especially large, but they do have the great benefit that they are relatively close to the EU15 and share much of the business ethos of the EU15 – and are normally only a couple of hours away if senior management have to intervene in development or management activities. Equally, within the EU legal and accounting issues are gradually converging. For the international fleet management and leasing business with a spread of clients, many will either have moved into the CEE markets or be contemplating such moves as they emerge from recession and reposition themselves for growth. Such a business status can represent an excellent opportunity for their suppliers. For a company entering a new markets, better to take with them their own suppliers who they know and trust. Their business is not to provide business mobility, it’s to sell goods and services – your business is to provide that transport. The international leasing company can have what may amount to a symbiotic relationship if you move into a new market together – you need each other.

‘Small and perfectly formed’ might be the definition of the individual CEE markets, few can provide the levels of outsourcing capability as the EU15, but they are closer and probably more akin to your current business than going for ‘big is beautiful’ – in terms of the BRIC markets.

CEE markets – several smaller countries but with an affinity to your existing successful business – or ‘go for broke’ and seek to develop a BRIC market – few would seek to take them all at once. Maybe BRIC markets are sufficiently alien as to justify a radically different modus operandi – do you have that model, the people and the clients to be sure of a realistic start – or should it still be a dream for tomorrow? I’m not saying ‘avoid the BRIC markets’ – but are you ready for them and what they might represent – or is there still high quality domestic business waiting for you? Think carefully about new markets you wish to open up! n

Figure 1 - New Business Development Issues • How big is the existing fleet market in the new target country/region? • What are current product/service needs – what might they require? • How mature is the leasing industry? • How/from where would you support the market? • Do service facilities exist to support fleets? • Are your current clients there/requesting you to provide services? • How would used vehicles be disposed of – locally/exported?

Be careful Every business needs a strategic vision, it also needs to be prudent. It is a very nice decision to have to make – develop

Professor Peter N C Cooke University of Buckingham

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globe’s land mass – can you take that on from scratch? How much business would you need to have a critical mass? China alone is now the biggest car market – what share would you want to lease? Some might say - can you afford not to be there? Many a successful company has a business model which suggests they ‘lead from behind’ – this could be a case in point! Let others make the expensive mistakes, buy their staff and grow – later.

PUBLIREPORTAGE

Kia : the time is NOW The European automobile industry begins to face a new future and one manufacturer has emerged as a very serious contender for it:

Chan Uk Jun, Kia Motors Europe Fleet and Remarketing Manager and Giuseppe Tommaso, General Manager Business Development.

Kia. With its appealing, new modern design, driving pleasure, environmental performance and economy, Kia now offers exactly the balance that fleet operators and their drivers are looking for.

Fresh range The Kia range extends from the all new 2011 Picanto city car, via the young-at-heart SOUL, right up to the Sportage and Sorento, two of the most stylish and cost-efficient SUVs on the market. In between, the Venga MPV, the all new 2011 Rio in the B Segment, and the highly successful cee’d with a choice of three bodystyles, ensure that all fleet drivers can find exactly what they are looking for. The new Picanto will feature four all-new power trains in 1.0- and 1.2-litre displacements, all boasting class-leading CO2 emissions levels. Additionally, petrol engines, LPG bi-fuel (90 g/km CO2) and flex fuel variations will be available, depending on the market. The new Rio has a swept-back profile, which gives it an in-built dynamism - even when standing still.

It delivers low running costs and class-leading CO2 emissions – with target figures for the model range starting at just 85 g/km with fuel consumption from only 3.17 litres/100 km. To top it all off, Kia brings you an elegant, stylish executive sedan at the end of 2011 – the Optima. Spacious, and with class-leading levels of safety and luxury equipment, the new Optima is set to be a very important car in the fleet world, boasting the same impressive credentials as its smaller brothers in terms of CO2 competitiveness, below 115g/km.

Ecologically impressive Low CO2 emissions go hand in hand with low fuel consumption. For example, the new Kia Rio delivers class-leading CO2 emissions and will be the cleanest and most fuel-friendly non-electric car in Europe. Take a look at the figures in the table of CO2 emissions per model to see how sustainability, ecology and fuel consumption are at the forefront of Kia’s strategy.

Competitive For Kia, economy comes in many forms and shapes. Firstly, through competitive list prices which translate into advantageous lease rates, thanks to the high residual values which characterize the entire range: the cee’d Sporty Wagon, for example, beats all of its competitors in EurotaxGlass’s residual value predictions, in seven European countries. And while we’re talking about seven, here is the final pillar in the Kia

The final word goes to Giuseppe Tommaso, General Manager Business Development at Kia Motors Europe: “We are in a new world, with new realities and new expectations. It’s time to break away from the old ways, and choose a modern, enthusiastic brand, time to breathe new values, new efficiency and pleasure into your company fleet. Time, in fact, to take a serious look at Kia, the real fleet alternative”. n

Kia’s low CO2 emissions models MODEL

CO2 EMISSIONS (g/km):

New Picanto (2011)

From 90*

New Rio (2011)

From 85*

cee’d

From 103

New Optima

From 113*

Venga

From 114

Sportage

From 135

Soul

From 137

Sorento

From 169

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Kia Optima

economy programme: every single Kia model in the range, every single Kia car in your company fleet, comes with a seven-year manufacturer’s warranty. Seven years! Take a look around the company car park – how many cars can you see in it today benefiting from a seven year guarantee? On top of this, Kia would not have been able to make inroads into the European fleet market over recent years, and would not be able to command such high residual values, if it had not paid great attention to the real and perceived quality of its models. Quality which is obvious from the outside through the design and the build levels, and from the inside through the ergonomic layout and the materials used.

The new 2011 Kia Rio

* Manufacturer targets

Fleet priorities “Getting this balance right for fleets is vital”, says Chan Uk Jun, Kia Motors Europe Fleet and Remarketing Manager. He sums up the ways in which Kia’s modern approach plays to the advantage of European fleets: “Fleet managers are under pressure from all sides: their companies are expecting them to deliver cost savings both at purchasing and operational levels, governments and company policies are putting forth ever more stringent environmental norms, and drivers looking for a vehicle, which is both suited to the job and a pleasure to drive. These factors have played a decisive role in developing the current and now complete Kia model line-up”.

STRATEGY Management

Conflict resolution

Where is the compromise? One might justifiably claim that fleet management is ‘an exercise in conflict resolution’ and, as such, perfection is well nigh impossible! Have you ever considered just how many different and widely conflicting interest groups are involved in the process – and all expect their particular interests to be given priority – no compromises.

Professor Peter N C COOKE

aybe if one was not discussing such a highly-visible and emotional subject then the stakes might be slightly lower. Recession and economic recovery have made the topic • Provide a ‘safe fleet’ even more emotional and any reduc• Maximise safety tion in headcount or the number of • Minimise cost company cars could make the topic even more political. • Minimise interference • Achieve best The stakeholder paradigm in • Flexibility value the figure below identifies • Minimise tax • Safety corporate just a first level of conposition cost control • Fleet flicts of interest and • Maximise RVs Manager some of the issues a • Fleet Car • Cost fleet manager has Driver Minimisation had to resolve and balance from time • Promote immemorial – and • Personal tax safety doubtless well into • Corporate tax • Risk STAKEHOLDERS • Methods of management the future as well. calculation • Driver • Fiscal issues • Duty It is interesting to IN FLEET • Tax training of care examine each of MANAGEMENT minimisation • Driver these groups of monitoring stakeholder interests in a little more detail. Some of them • Corporate • Corporate create concerns Governance image • Corporate within the same indiSocial viduals within the orga• Competitor Responsability nisation. The picture is • Board strategy analysis also further complicated in • Mobility provision • Vehicle selection that the issues highlighted • Reporting & • Vehicle condition here are those within the jurismonitoring diction of the fleet user business • Carbon footprint and do not embrace the external • Appropriate powertrain issues which might occur with leasing companies, government and the vehicle manufacturers. Our list is quite complicated enough – Source; author – for illustrative purposes only – not comprehensive are there any issues which you, as a professional fleet manager within an

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Internal Stakeholders’ Interests in the Fleet

STRATEGY Management

international organisation has managed to avoid? Certainly some of them will be taken elsewhere within the business depending upon your exact structure, but one suspects they will all be there – among others. Consider the individual groups of issues and the potential internal conflicts they may create. The paradigm highlights the various areas and some of the topics germane to that particular stakeholder interest – the comments below seek to summarise these issues and their implications. • Fleet manager; while not the ultimate arbiter in terms of fleet management and conflict resolution, the role is critical and it is important that the fleet manager has clear reporting lines to senior management for insoluble conflict resolution should it occur. The role is part executive and part coordinating. • Cost minimisation; often considered the key role of the fleet executive – it’s certainly important and takes in an everwider range of topics as the role migrates more towards that of business mobility coordinator in many forward-thinking organisations. • Duty of Care; a critical element of the fleet executive’s task for which there may not be budgets and little more than a mention in the job specification. However, it is vital within the organisation, and may require top management support, especially as company car drivers are asked to do more as business gets more competitive.

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• Corporate governance; a difficult role for the fleet executive in that it may take in policies and decisions above their salary grade and, as such, require supreme diplomatic skills to be able to persuade policy makers of the central role of the company car and the fact it cannot be run on an ever decreasing budget.

• Corporate Social Responsibility; another interesting challenge – CSR all too often slips down the list of management priorities during a period of economic downturn – how does the fleet executive keep it on the management radar – and within budget?

• Corporate Image; to be competitive, employee cars need to match competition or staff may be vulnerable to headhunting. At the same time those units have to be fit for purpose, maintained in best condition – and all within the budget. In a service industry, the company car is often the organisation’s only tangible asset the client will ever see. • Fiscal Issues; tax concessions and allowances regarding CO2, capital allowances and driver tax liabilities, not to mention fuel taxes will all get blamed on the fleet executive. It is getting increasingly difficult to balance them out as rules change and more information is required. This may get still more complicated as electric cars move onto the fleet. • Fleet Car Driver; had to come into the equation eventually! The fleet car driver is the fleet executive’s real client – but there are many conflicting issues, even internally, that may interfere with and confuse the relationship. It’s many years since I last managed a substantial fleet; it has certainly become more complex than it used to be, and that’s only the internal issues with some of the conflicts which might arise.

Prioritisation of objectives Perhaps the most important management issue from the fleet executive’s viewpoint is the ability to bring all of the elements highlighted in the foregoing paragraphs, plus the external issues which are even more complicated, together and make them work within the business. Such a claim is perhaps a little naive – the role is much more complex and ever more so during a period of tight budget constraint. The fleet executive has to achieve the best value from the fleet budget while satisfying all of those other pressures. Prioritisation of objectives for the fleet executive is a difficult, many would claim impossible task, beyond the first two or three. The first has to be to ‘maximise fleet safety’ – protecting drivers, other road users and the general public. A task which is easier said than done in that the company car is earning its keep

when it’s away from direct management control and supervision. That creates a special case of driver relationships, based these days on driver information and motivation – as often as not with senior executives in the organisation who may well consider the task to be irrelevant to their objective of ‘maximising shareholder value’. Of all the roles within the business, that of fleet manager is one of probably three that run across the whole organisation. The others? The wages clerk is one – under whatever title – and of all roles, the one whose quality assurance is expected to be highest... essentially ‘everybody’s’ friend’. They have no discretion beyond getting the sums wrong. The second? The chief executive – his, or increasingly her, role is sacrosanct – they are boss, if all goes wrong, they fall on their sword – or are fired. The third? – Well - the fleet executive of course! Of the three roles, that is probably the one with the most theoretical ‘discretion’. However, that discretion is, in reality, fairly tight in that a total personal business mobility strategy and programme has to be delivered – within a tight budget. While all members of the organisation know they could run the business better but will not tell the CEO, and don’t want to be the wages clerk as the role is too restrictive. The only role in which they could demonstrate their broader expertise is in managing the fleet – and they are generally very happy to give you the benefit of their prejudicial and hidden expertise. In summary, fleet management is an oft fraught role, a compromise, a balancing act between the different elements of fleet management but of necessity constrained by budgets, operational requirements and often undeclared - sometimes unknown fleet objectives. But, that’s what makes it such an interesting role!

Professor Peter N C Cooke University of Buckingham

STRATEGY Green taxation in 2011

Car Taxation

Car taxes evolve on the green highway Taxes are part of life. The economic circumstances are influencing taxes and taxes are used to steer consequences of economic situations; also for car taxes. Prudent optimism could be good description of current feeling in the market. Differences between countries in economic position in the EU make it difficult to make some comments valid for Europe.

Bart VANHAM

evertheless we see some similar measures taken by some countries the impact of which on the fleet market we will try to describe below. In any case, 2011 is the year of hope.

Ending of scrapping schemes

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Quite some countries did introduce scrapping schemes to stimulate market demand with the green objective of taking out old cars. As indicated before in Fleet Europe, history has shown, France had introduced such scheme in the 80’ties and Italy later in the 90’ties, that these schemes do tend to pull forward and accelerate sales in stead of having an increasing effect on sales. Many countries, France, Spain, Germany, Italy, UK,… indeed saw and see sales drop in the after scheme hang over. Other countries, like Belgium and the Netherlands, where this scheme was not introduced, car sales eventually were (near) record sales. Overall sales in Europe dropped by a 5%.

Since B2C sales generally drop, car manufacturers go the extra mile to convince fleet buyers leading to historical high discounts maintaining more or less numbers of B2B sales. It is expected that when the B2C market gets boosted again, these B2B incentives will fade.

Green taxation The number of countries introducing CO2 -related taxation seems to have flattened out. Greece, in search for funds, did introduce a green, usually socially better accepted, car taxation. Other countries not on green yet, seem to await better times. Nevertheless, many international fleets have taken and/or are taking the opportunity to introduce a CO2 focus in their fleet resulting in quite significant savings. Unfortunately, with a change of government in The Netherlands, the plan to introduce a kilometer charge was postponed for an undefined time. With the electric vehicle technology becoming very real (the Geneva Motor Show seems to be full of it), most countries are implementing some sort of incentive for EV’s by either exempting those cars (or should we say computers?) from car taxes or providing actual subsidies or subsidised rebates for B2C and B2B consumers. The same can be said for infrastructure surrounding the EV’s. Future will tell if these incentives are sufficient to convince buyers to accept practical (psychological?) barriers?

VAT rates A number of countries, UK, Portugal, have raised their VAT rate. For the UK and Portugal that do block (partially) the input VAT deduction on cars this immediately adds to the bottom line. It makes leasing more expensive and adds to the running cost of the cars. Furthermore, in the early weeks or months after the raise it also influences nega-

tively B2C car sales. It is to see if these VAT rates increases are temporarly...

Place of supply rules for services However, some changes in VAT do open opportunities for further cost reductions due to operational efficiencies. Since 1 January 2010 invoicing services cross EU borders is simplified and does mostly not result in any VAT prefinancing. This implies that an international company also can envisage to create a centre of excellence from where is steers (strategically) the international car fleet. Savings are to be expected both in terms of quantity; FTE’s, rebates, … and quality; streamlined, best practices processes, easier expansion and change,…. Companies gone that way do indeed witness improvements and savings..

Higher oil prices with (higher) excises The economic recovery (and of the current unstable political situations in North-Africa) however are boosting oil prices in the direction of previous record heights. With excise duties mostly being expressed in %, the effect increases making governments rich(er) on excise income pushing the price at the pump very high. This will certainly have it impact on fleet costs and on the way fleets are managed in 2011. It could well be that these changes will enhance the move into EV’s development and a more multi mobility approach. A few things are clear: it is a very complex situation international fleets find themselves in; higher taxes, CO2-related taxes, still unstable economics, new technologies and new generations approaching mobility from a different, less car driven, angle, make the fleet world as interesting as never before. And taxes have and will keep on having their impact.. So let’s stay tuned….

Bart Vanham Car taxation specialist

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STRATEGY Fleet Europe Awards

Microsoft

Real Value, Real Results If one says Bruce MacLaren, one says fleet management vision. Bruce MacLaren has been in charge of fleet at Microsoft for five years. A well-known figure in the industry for his forward-thinking views, it was probably no surprise to anyone when his name was announced as ‘International Fleet Manager of the Year’, at the 2010 Fleet Europe Awards.

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Tim HARRUP

Bruce MacLaren, Senior Category Manager at Microsoft : “Key to our success is having a great team that delivers real value and real results.”

I see you are using the new Windows Phone 7. Do you like it? B.M.: “I love it! This phone is all about what is important to me. It helps me manage my professional and private life all in one device. My teenage daughter tried it and I had to chase her to get it back!” n

the supply chain is functioning as expected.” How is the fleet organized? B.M.: “We have outsourced all local administration to suppliers in a multi-supply context. We manage those suppliers with a central-led category team reporting to me. Two members of my staff operate our driver satisfaction centre, dealing with escalations that may occur from a local level. This team also measures driver satisfaction through surveys and KPIs from our operations. My category team performs strategic supply management, car policy development and provides business insight to all subsidiaries where we operate fleets. Key to our success is having a great team that delivers real value and real results.” n

“ I believe that true leadership is not doing what is easy and popular, but it is doing what is necessary and right for the company. ” n How is your fleet program progressing? B.M.: “We recently released our Q2 fleet results. For H1 we spent 47.57% of our yearly budget; well in line with expectations. We achieved a savings of 4.83% of our addressable spend and have already achieved over 100% of our yearly committed savings. Our CO2 is at 144.6 g/km on new orders, down 5.5% year over year with an accelerated downward trend; which is heavily influenced by our global policy. Our cost per unit per month decreased 6.2% year over year and 1.52% quarter over quarter respectively. Our driver satisfaction in fleet management is up 2 points year over year and up 8 points over two years ago. We are tracking at 0.5% driver escalations coming in to my team, which means that 99.5% of all driver issues are resolved through our supplier base. We have zero business partner escalations year to date. This indicates that

n How have you developed your international car policy? B.M.: “We created a global council made up of executives from Procurement, Finance, Human Resources, and Environment. I chair the council. It provides executive guidance regarding policy. We solicited feedback from local and regional stakeholders to present before the council. Decisions were made by the council and further buy-in was obtained from the business. Implementation was executed through targeted communication at a regional and local level. The results were designed to facilitate improved business alignment, opex reporting, cost savings and a reduction in our carbon emissions. We mandated that all fleet costs must be booked into 10 unique general ledger codes. The global policy supersedes all local policies. No local policy can be changed without

the approval of Procurement, Finance, and Human Resources. We empowered my team to negotiate the mileage or duration of any new or existing lease contract. My team can now negotiate any lease contract on forecasted mileage as opposed to a generic subsidiary average mileage. This reduces the variation between contracted mileage and driven mileage at the end of the term. We created a CO2 target of 130g/km.”

Microsoft Microsoft Corporation, founded in 1975 is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions. With operations in most countries across the globe, Microsoft employs 90,000 persons and turns over some 63 billion dollars annually.

Bruce MacLaren Bruce MacLaren is an advocate of win-win situations between clients and suppliers. And he extends this philosophy to the way he interacts with his peer fleet managers. As a frequent speaker at the IFMI (International Fleet Managers Institute) he shares his experiences and his successes with others. He is also a well-known champion of the profession of international fleet manager, a role which he clearly enjoys himself. Bruce MacLaren also ensures that his own team is given the opportunity to take advantage of the IFMI and the training it provides.

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ith the launch of Office 10, its new Windows Phone 7, to selling over 8 million Kinect devices in just 60 days, things are on the move at Microsoft. And this includes the fleet, which has 9,333 passenger cars. High expenditure, high cost savings potential, and the opportunity to help the environment on the way. Bruce MacLaren explains how it is done from a Microsoft perpective.

STRATEGY Fleet Europe Awards

It was Hans-Georg Lutz, Senior Manager international Corporate Sales at Mercedes-Benz Cars, who handed over the first prize to Bruce MacLaren.

Let us come back to some of these points. You mentioned CO2 emissions. What strategy are you using to reduce emissions and what are you largest challenges? B.M.: “Considering that we operate a 100% benefit fleet, we trade in the high tech space and we operate premium brands, the target is quite aggressive. The challenge is to provide reasonable alternatives, keep cost flat and incur minimal employee disruption. We use overn

make exceptions to our car policy. Yes, we faced resistance. You can’t create this kind of change without it. We identified broad principles to which a great majority could agree: a sustainable benefit cost savings, responsible environmental impact and improved business alignment. We built upon those. I believe that true leadership is not doing what is easy and popular, but it is doing what is necessary and right for the company.”

“ At the heart of every successful international fleet is a governing policy. ” all caps, caps by car policy level, bonusmalus schemes and other alternatives, such as car plus public rail passes. In some cases we have also restricted choice.” You also mentioned that your central policy takes precedence over local policies. How do you ensure it is followed, and did you meet resistance? B.M.: “We had the choice to place the policy under Procurement, HR, or Finance as these are the main stakeholders. We decided to place the policy under Finance since one of a controller’s tasks is compliance. Our supplier base helps as well as they are not empowered to

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n Moving on to the vital question of TCO, how do you monitor this, and have you had success in reducing costs? B.M.: “We have a global accounting system where all fleet costs are booked to ten general ledger codes. We receive an executive view of these costs on a monthly basis, which reflects the costs against budget. We can now create trend reports. On the average we have saved $5 million year over year which represents 5% of our addressable spend. This has been achieved mainly through competitive lease bidding, tax optimization, unbundling accident management from

the operational lease, volume related bonus, sale of depreciated assets (where we purchase), fuel negotiations, extending lease durations and negotiating insurance premiums where we have insurance unbundled.” n Do you see further opportunities for cost reduction? B.M.: “There are always multiple opportunities since we procure in a dynamic, heterogeneous marketplace. Reducing the cost of accidents and damages is an opportunity. Introducing alternative power trains, to save on fuel cost is another opportunity.”

n Has the economic crisis had an effect on the way you operate? B.M.: “Economic downturns are a great opportunity for procurement to bring real value. During such times the business turns to procurement for improved cost efficiency. I think that this was one of the macroeconomic factors which helped facilitate acceptance of a global car policy. A door of opportunity was opened. We walked through that door.”

n Can you give an overview of the various projects you have successfully implemented internationally? B.M.: “At the heart of every successful international fleet is a governing policy.

It’s precisely to thank its team for raising continuously her qualification level that Bruce MacLaren wished to participate at the Fleet Europe Awards.

We moved from a decentralized management structure to a central-led category team of international subject matter experts reporting into myself without any forced attrition. We mandated GL codes

age fleet across the world. This will lead to us making decisions about what parts of the supply chain we will continue to touch and what parts we will outsource.”

The Microsoft fleet GLOBAL FLEET MANAGER : Bruce MacLaren BASED IN : Munich, Germany

to be used globally to record our opex. We now have defined and implemented meaningful global metrics which provide business insight. We have standardized our subsidiary business reviews. Our metrics were designed to facilitate the review of the total cost of operations as opposed to looking at front end pricing: thereby facilitating a more holistic approach. We don’t manage lease prices, we manage life-cycle costs.” What do you believe to have been particularly innovative in your international car policy, and what are your future challenges? B.M.: “We created a global policy which mandated critical areas while allowing the subsidiaries a great deal of freedom. In doing so we were able to create a globally consistent approach to reducing harmful emissions. A challenge moving forward is to achieve more consistency in the way we man-

Any wishes for the industry? B.M.: “I would like to see IFMI expanded to include a certification program. Hiring would be easier if we knew a potential candidate was “IFMI Certified”. I would like to see a much higher adoption of internet meetings. I still see a lot of suppliers traveling around when they could be saving time, money and our environment by adopting technology which is here today. I know the technology works because I use it every single day. I’d better go now and procure a Windows Phone for my daughter, before she tries to take mine again!” n n

NUMBER OF CARS : 9,333 NUMBER OF VANS : 0 NUMBER OF COUNTRIES WITH FLEETS : 60

Tendering The Microsoft supplier selection process begins with an assessment of the sourcing requirements. This leads to a formal sourcing process, which consists of an RFI, RFP, Short List, Negotiations, and the awarding of a contract. Questions in the tender documents (to potential suppliers which meet Microsoft’s criteria) are pre-weighted so that tenders can be objectively measured. Once a winner has been identified, the negotiation process begins, and if this should fail, the second-placed candidate may be invited to negotiate. At Microsoft’s discretion, losing candidates may be provided with limited feedback.

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“ A door of opportunity was opened. We walked through that door. ”

STRATEGY Fleet Europe Awards

You can be the next International Fleet After presenting in this issue the case studies of the awarded companies of the Fleet Europe Awards 2010, itâ&#x20AC;&#x2122;s already time to launch the next edition and to present the Fleet Europe Awards categories for 2011. Following the success of the edition 2010, taking place at the Brussels Stock Exchange, we are obviously retaining the successful prize categories from previous years. The Fleet Europe Awards are designed to find the best case studies throughout Europe, to put the spotlight on innovative projects and especially to share best practices.

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Julie WIDART

On 27 October 2011 the winners will be unveiled during the Awards ceremony in Madrid, an event closing the Fleet Europe Forum.

t Manager of the Year

The International Fleet Manager of the Year rewards the person or team having most successfully developed an international fleet management strategy and implemented an efficient car policy, leading to an optimised TCO and taking into account local differences, best practices and actual fleet trends. • Previous winners: Raphaëlle Jeanneret, Novartis (2007) - Claus-Peter Krüger, Shell (2008) - Werner Berger, Nestlé (2009) – Bruce Maclaren, Microsoft (2010). • Selection process: Complete the registration form and send your company dossier to Fleet Europe. Deliberation by the selected jury.

International Fleet Green Award 2011 The International Fleet Green Award is gaining in popularity, because green is hot. This award is given to a company that has successfully implemented a green project for its fleet. It rewards a project that focuses on eco-friendliness, balancing TCO optimisation with ecological aims, whilst taking into account driver satisfaction. • Previous winners: Akzo Nobel (2007) - Hewlett-Packard (2008) - Bayer (2009) – Nokia Siemens Network (2010). • Selection process: Complete the registration form and send your company dossier to Fleet Europe. Deliberation by the selected jury.

International Fleet Safety Award 2011 The International Fleet Safety Award is given to a company that has successfully

developed a safety project for its fleet, within the framework of the CSR strategy. It rewards a project that focuses on original tools and programmes to improve the safety of its drivers and takes into account TCO optimisation. • Previous winners: Shell (2008) – BP (2009) – Coca-Cola Hellenic (2010) • Selection process: Complete the registration form and send your company dossier to Fleet Europe. Deliberation by the selected jury.

How to enter the competition? Contact Fleet Europe’s team directly if you wish to receive more information, or visit our dedicated Fleet Europe Awards website. www.fleeteurope.com/awards. Don’t hesitate any longer and apply before August 10th to be a candidate! Contact: Annick Nemetz (anemetz@mmm.be)

International Fleet Mobility Award 2011 The International Fleet Mobility Award is given to a company that has successfully developed and implemented a mobility project for its fleet. It rewards a project that focuses on enhancing mobility within the company while offering original alternatives and optimisation of the use of the car and taking into account TCO optimisation and driver satisfaction. • Previous winners: Barilla (2009) – Accenture (2010) • Selection process: Complete the registration form and send your company dossier to Fleet Europe. Deliberation by the selected jury.

International Innovation Award for fleet-owners 2011 This special prize for innovation rewards a fleet related project that stands out in the field of innovation.Innovation or novel approach in a specific field of fleet management (car policy, implementation, international organisation, tools, green approach, safety approach, mobility approach). • Previous winner: Vodafone (2010) • Selection process: Complete

Why you should consider applying • Personal recognition: taking part will provide you with recognition and respect for your job, in the presence of your industry peers, your suppliers and partners. • Recognition of your department: winning an Award is the ideal way to show your team that their efforts to optimize fleet management are appreciated - and applauded throughout the industry. • Benchmarking: being evaluated by a jury of professionals, who compare the management of your fleet to that of your peers, will contribute to optimize your own fleet management. • Meeting your colleagues: the nominees for all Awards will be invited to the evening at which the prizes will be awarded, making this a perfect networking event.

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International Fleet Manager of the Year 2011

STRATEGY Fleet Europe Awards

Who will succeed to Werner Berger (Nestlé - on the right) and Bruce Maclaren (Microsoft - on the left) as International Fleet Manager of the Year ?

the registration form and send your company dossier to Fleet Europe. Deliberation by the selected jury. International

Voting by an International Fleet Managers Panel.

Fleet Europe Hall of Fame 2011 International Fleet Industry Award 2011

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Since last year, Fleet Europe also decided to award a special prize for the industry suppliers. This award is designed to highlight innovative and efficient tools, products or services offered by fleet industry suppliers (manufacturers, leasing companies, other suppliers). • Winner 2010: Arval for their project ‘Arval Analytics’. • Selection process: Complete the registration form and send your company dossier to Fleet Europe.

During the ceremony of the Fleet Europe Awards 2010, the audience also discovered for the first time the name of the first fleet industry pioneer to enter the Fleet Europe Hall of Fame. This award recognises fleet industry leaders and pioneers who have significantly contributed to the international fleet management profession. Eligible nominees must have at least 5 years of international fleet management experiences and have contributed significantly to the industry.

• Winner 2010: Tony Elliott, Director European Sales & Consultation, ARI Strategic Services Group. • Selection process: Complete the nomination form online (www.fleeteurope.com/awards). The winner of this category will be chosen by the Fleet Europe readers and the visitors of the website www.fleeteurope.com. n

STRATEGY Fleet Europe Awards

Coca-Cola Hellenic

When fleet is lean and safe Coca-Cola Hellenic is one of the world’s largest bottlers of The Coca-Cola Company, serving a population of approximately 560 million people across diverse cultures and geographies in Europe and Nigeria. The company runs one of the largest commercial fleet in Europe, with approximately 19,000 vehicles across its European operations. In recognition to the company’s efforts in harmonising the fleet, Coca-Cola Hellenic was awarded the International Fleet Safety Award 2010. Tim HARRUP

etting up a car policy and an international fleet strategy for such a wide-ranging organisation as Coca-Cola Hellenic is very challenging. However, it appears that Coca-Cola Hellenic is meeting the challenge, and brings back substantial results along in terms of compliance, savings, and CO2 reductions. The Fleet Support Manager of Coca-Cola Hellenic, Janos Kis provides us some more details about the many aspects of the company fleet.

First of all, tell us how the international fleet management process is organised. Janos Kis: “Our organisation is very lean. The Fleet Support Manager role is to

interface between the 28 country managers, the group senior management, the cross-functional managers and of course our suppliers and partners.

strategy. The countries report back on operations and the Group monitors performance taking note of trends and high level business indicators.”

“ At the moment the fleet focus is on handling safety related risks and monitoring fleet safety performance. A very precise definition of the ‘accident’ and accident categories has been developed, to make reporting clearer for the countries. ”

Strategy is defined at Group level, but in discussion with the country operations which are responsible for managing their own business in line with the agreed

Janos Kis, Fleet Support Manager of Coca-Cola Hellenic, receives the International Fleet Safety Award 2010 from Oliver Lajara, General Manager European Fleet & Remarketing at Hyundai Europe.

How much influence do the countries have in setting the policy? J. K.: “Group and country operations work this out together. The countries were all very involved and made suggestions and recommendations that were taken into consideration when forming the final policy which was ultimately reviewed and approved by the Operating Committee and Board of Directors. Countries are always treated with respect and are involved into the decision making process, which ensures smooth execution and good level of compliance. n

In case of fleet related assets and service purchases, countries submit formal requests, for approval by the Group before purchases are made.” When was the fleet policy exactly developed? J.K.: “The central fleet function was established in 2007. Prior to 2007 there was limited understanding about the potential for a Group-wide fleet strategy.

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How does the Total Cost of Ownership (TCO) fit in? J.K.: “The TCO approach has been implemented with safety and emissions reduction included as part of the decision making criteria. The company developed and rolled out a green initiative, which has already yielded tangible results, having reached 2 million Euros of savings in 2009. This initiative is best practice within the Coca-Cola system. The first Group-wide tendering process was conducted in 2008 by assessing potential vehicle models, including specs, defined by the countries in all vehicle segments. At that time the target was to select one OEM by country. This selection was mandatory for functional cars, and recommended for management cars. Countries had to run local tenders to select a leasing provider on a yearly basis. This strategy was implemented for the period 2009-11. This year a new tender will be out. The company has made international master agreements with three large Lessors, but since these companies can only partially cover our geography, countries are also free to involve local partners. Countries can differ from the car allowance according to local standards. For example, a sales car in Switzerland is typically selected from a higher segment than a vehicle used for the same purposes in Serbia. However, specs are always challenged as a part of the tender process. We target the selection of the most downsized vehicles possible that are still fit for the company purposes. Since change is very frequent in the automotive world , Company strategy is reviewed, revised and updated accordn

ingly, so that Coca-Cola Hellenic always remains up to date and synchronised with all the new trends in the sector.” n How key are safety and environmental issues? J. K.: “At the moment the focus is on handling fleet safety related risks and monitoring fleet safety performance. The company uses quarterly reporting to benchmark country performance, identify best practices and agree on country specific action plans to address any issues. Performance measurement standards are currently being established to constitute a solid base for performance tracking. A very precise definition of the ‘accident’, and accident categories has been developed, to make reporting clearer for the countries. Also a standard repair cost threshold was established that reflects input from all operations. As a result of these developments, operations most in need of improvement can be easily recognised. In terms of ‘green fleet’, a Safe and Eco Drive Project was piloted back in 2007. Following a successful roll-out in all Coca-Cola Hellenic countries in 2008, the company was able to reduce CO2 emissions from fleet by 6,000 tonnes in 2009. At the same time, Coca-Cola Hellenic has reduced its overall fuel consumption by 6.3%.”

n What do you consider to be innovative in your fleet strategy? J. K.: “One of the most impressive innovations of the Coca-Cola Hellenic fleet strategy is the way the fleet is managed and the policy communicated across the 28 different countries. This would not be possible without excellent cross-functional cooperation involving employees with different responsibilities and at differing levels of seniority.” n

Safety Award The International Fleet Safety Award is given to a company that has successfully implemented a safety project for its fleet. It takes into account original tools and programmes to improve the safety of drivers and takes into account TCO optimisation. Janos Kis not only took this prize last year, but was also runner up to Bruce MacLaren in the ‘International Fleet Manager of the Year‘ category.

Coca-Cola Hellenic Coca-Cola Hellenic is one of the world's largest bottlers of products of The Coca-Cola Company with sales of more than 2 billion unit cases. It has operations in 28 countries serving a population of approximately 560 million people. Coca-Cola Hellenic offers nonalcoholic beverages in the sparkling, juice, water, sport, energy, tea and coffee categories. Coca-Cola Hellenic states its commitment to promoting sustainable development in order to create value for its business and for society.

The fleet in figures TOTAL FLEET : 22,200 NUMBER OF CARS : 3000 NUMBER OF VANS : 12,800 NUMBER OF COUNTRIES WITH FLEETS : 28 TOTAL ANNUAL MILEAGE : 630 million km

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Coca-Cola Hellenic was not previously considered as an international customer for vehicle Manufacturers (OEMs) and Leasing companies. In the years that followed the formation of the central fleet function, Coca-Cola Hellenic developed and implemented a fleet policy, which is already exceeding set targets in terms of compliance.”

STRATEGY Research & Market Insight

Lease Accounting

Confusion after global outcry The long running joint project of the European and American standard makers to thoroughly reform accounting rules for leases may have come to a turning point with the end of the consultation period. One reason more, not less, for fleet practitionners to get involved now ! Vincent RUPIED

hatever doubt you may have regarding the economic relevance of leasing for business stakeholders should now be set aside by the scale of the wave created by the disturbing IASB/FASB Lease Accounting project. While a few hundred stakeholders usually take position on the most important projects, no less than 760 have made comments on the Exposure Draft released last August. An absolute record

for a product specific standard. Only the universal Revenue Recognition project has gathered more reactions (970). This may be the sign that awareness on the project is no longer the privilege of a few experts and that disruptive impacts on key leasing features, notably in the fleet business, have caught the eye of more leasing operators and users. However, the unattractiveness of the topic keeps dissuading many executives from get-

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The main practical drawback of the proposed new Lease Accounting standards for automotive fleets will lie in less flexible management processesâ&#x20AC;?, predicts Vincent Rupied of Leaseurope.

ting involved, precisely when lobbying would be most effective. The object of this article is to combat the idea that industry opinions will inevitably be heard and recall that key amendments to the reform are now in discussion.

The project, in short The essential goals of the far reaching reform project are to give full transparence to analysts on assets and

An unprecedented wave of criticism Although it is difficult to gain a global view on such a amount of opinions, it is striking that the first and maybe unique beneficiaries of the project – the analysts – did not massively answer nor express an overwhelmingly positive perception. Referring to their long experience and a methodology for capitalizing off-balance sheet leases for analysis purposes, they do not find a satisfactory solution in the model. Across all stakeholders the hardly manageable complexity of the model and its doubtful contribution to actual transparence are most commonly seen as an intrinseque flaw. Systematic and widely judgmental application of probabilities in the calculation of accounting entries weaken the intended clarification, as evaluations of future contingent (variable) rentals and optional renewal periods have to be included in the initial asset value. As a result, while the principle of recognising a right of use on the balance sheet of Lessees is widely seen as desirable, the required complexity to make it possible is not accepted by many. Finally the absence of a serious cost benefit analysis is seriously criticized. Regarding the differentiation of Leasing versus Credit on one side and Service Contract on the other, the project does not provide effective guidance and rather

worsens the uncertainties and leaves open significant opportunities for intentional structuring – that the project intended to eradicate. On the Lessor side in brief, the dual model that virtually reinstates the operating/finance lease divide and worryingly inflates the operating lessor’s balance sheet is clearly rejected and will require an alternative proposal.. Last but not least, a number of conceptual inconsistencies were raised with other existing or planned accounting standards involved in the IASB/FASB convergence, especially Revenue Recognition.

What will the Boards do now ? An absurdly tight calender forces the IASB and FASB to deliver a final project by mid year 2011. However they have made no secret that the wave of criticism requires substantial adjustments in the project and they have started to actively consult the industry in the intent to identify mitigating simplifications. The question for the industry is naturally whether the project can be hastily made manageable or is intrinsequely flawed. Will a few months allow the invention of solutions not discovered over years of preparation ? In fact, although in a final phase of elaboration the standard is still incredibly immature. Ironically the Boards recognise that one of the crucial questions to be answered urgently is what is a lease ? The most probable – and reasonable – outcome of the Boards’ discussions should be a decision to postpone the delivery of the whole project. Alternatively it seems unlikely – but not completely impossible – that only the Lessor side is postponed, in order to issue at least a partial standard on time. Although polically convenient, this solution would seriously undermine the consistency and the credibility of the whole project, with major incongruencies coming up in the consolidation of sub-leases. But the Boards may take even more time with their initial assumptions, even if it means dropping the major goal of unified standards. They have just instructed their staff to work on a split of both Lesses and Lessors into two categories that

would virtually recreate the operating vs financing divide. Both kinds of Lessees would carry a right-of-use on their balance-sheet but the amortization of assets and liabilities would be linked in operating leasing (resulting in a constant charge over the period of the lease) while the original dual amortisation would be maintained in finance leases, (with an unchanged decreasing accounting charge). One drawback of the project would then be mitigated for operating Lessees, but would this be sufficient ?

If goals are missed – drop it After the public consultation duly organized by the Boards, a less transparent phase of expert brainstorming and project readjustment is now taking place. While it may appear as a somewhat desperate intent to save a patient seriously ill, it is not too late but the right moment to ask all associations and lobbies representing businesses to push for common sense decisions : drop the deadline of June 2011 and avoid hasty arrangements, submitting a revised Exposure Draft for both Lessee and Lessor once the issues will be satisfactorily solved. In the meantime, keep applying the existing IAS17, with a renewed scrutiny against fake operating leases meant for window dressing. We may then discover that these standards, when properly enforced, provide a satisfactory level of transparency and economic rationality. n

Vincent Rupied Chairman Automotive Steering Group, Leaseurope (European Federation of Leasing & Rental); Director Corporate Relations, ARVAL Executive Director, Corporate Vehicle Observatory.

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liabilities from leasing and put an end to the differentiated treatment so far for finance and operating leases. Operating leases namely, are seen by the IASB and FASB as being responsible for massive window dressing – mainly in the big ticket deals. The proposed solution is to put all leases on the balance sheet of Lessees through new types of assets and liabilities initially measured as the discounted sum of future rentals. Then the depreciation of the asset, called the right of use, would be a straight line while the liability would be amortised on a financial basis, like a loan. As I earlier wrote in these pages (Fleet Europe, May 2010), the main practical drawback from this new standard for automotive fleets would lie less in financials than in processes, with less flexibility to dynamically manage the vehicles.

INDUSTRY Partner

Ian Hucker, Opel

Upbeat and optimistic Opel has recently emerged from a substantial restructuring process. We asked Ian Hucker, Director European Fleet, Remarketing and Used Vehicle Operations, to tell us how the brand is facing the challenge of responding to fleet industry needs. an Hucker started his GM career in 1992 with Vauxhall in the UK, and has since worked in Switzerland, the US, Germany and Russia, before being appointed into his current role in August last year.

n How is Opel faring, following the much-publicised reorganisation? Ian Hucker: Things are going very well indeed, and everyone is now looking forwards. We gained market share in most European markets last year, and we are continuing our upward path with new products coming to the market. At the end of the day, it is all about product, and we have just launched the Astra Sports Tourer. This car is everything its fleet segment needs and wants, and it makes it a pleasure to be working in Fleet when you have a product like that. It makes us very upbeat and optimistic.

n Staying with products, what other new models or innovations can we expect this year?

I.H.: This year will see the completion of the roll-out of the new Astra range. The Astra Sports Tourer launch started at the end of last year and later this year we will have the 3-door GTC model, effectively completing the Astra line-up. But it’s quite a big year, as we also have the Ampera and new Zafira coming along. How important are fleets to Opel, and what is your fleet strategy? I.H.: Fleets have always been very important to Opel/Vauxhall, and this year the focus is on building awareness of our new generation products. It really all started with Insignia, which was the 2009 Car of the Year and has been very successful – in fact we’re still trying to keep up with demand some years after launch! I’ve already talked about Astra, but Corsa also had a very significant refresh at the beginning of the year, and Zafira is to come. So it is our job in Fleet to make sure our customers know just how good these new cars are. We will be spending a lot of time with fleets ensuring they n

can see, touch and drive the cars. The number of user-choosers in fleets has grown significantly over the years, and we want to make sure that this fleet driver group, which has a choice, chooses the Opel/Vauxhall model. n How does the fleet programme operate at an international level? I.H.: My team here includes an international group which looks after panEuropean corporate customers, leasing companies with an international footprint, and the major international rental companies. We have just strengthened this team by appointing an additional pan-European corporate account manager, based in Budapest. Our clients tend to be expanding their fleet operations further east, and we now have someone on board who understands these markets and can help them with their fleet policies and acquisitions.

Tim HARRUP

Opel Ampera Electric Car Concept

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“The new Ampera will take us into a whole new field, that of electric vehicles. In product terms, ours is unique, with its range extender. It makes it the only viable electric vehicle on the market. It covers 40-80km on battery power only, but, once the battery is depleted, the range extender then generates electricity to give you effectively an unlimited range. This overcomes the risk of the vehicle being left stranded and is what makes the car uniquely suitable for fleets.”

Ian Hucker, Director European Fleet, Remarketing and Used Vehicle Operations at Opel : “The number of user-choosers in fleets has grown significantly over the years.”

Urs Haymoz, HAYMOZ Fleet Performance

Performance and transparancy HAYMOZ Fleet Performance is an independent international fleet management & consulting company based in Dietikon, Switzerland. 8 years ago the founder and Managing Director, Urs A. Haymoz, started the company as a classic project management and consulting company with international tendering and corporate/country fleet reorganization.

restrictions and on an “open book” basis regarding the TCO of cars. We do not touch cars. Cars are in hands of the car owner, but we take care on the cost performance of cars on client’s mandate basis.” What are for you the two new trends in fleet business? U. Haymoz : “The complexity of international and local fleet management is drastically improving, driven by new technologies of the manufacturers on one hand, the necessity of efficient policy and cost control on the other hand. Both trends tend toward a professionally based fleet management policy and the hire of external and independent expertise. New and internationally standardized data processing technologies are the enablers of this process. That’s exactly what HAYMOZ stands for.” n

“

n What services with which added value do you propose to international fleet managers?

U. Haymoz : “Depending on the capability to target ambitious goals, our customers realized a decrease of the TCO cost level on a two-digit value. The consolidated visibility of a car portfolio, and the respective TCO and CO2 exposure - all on one single external platform - is recognized today as the most wanted value for international fleet managers. To have a strong partner as a general contractor for all management services no matter which service provider is handling cars at local level is a strong value.” n How do you guarantee your independency towards your clients and the market? U. Haymoz : “Transparency combined with strict confidentiality, experience and safe processes are our commitment to our clients and their suppliers. We underline this by working with all leasing providers and car manufacturers and their confidential customer data without

Steven SCHOEFS

An international fleet management policy is possible Urs Haymoz : “Of course it’s possible, as long as there is a local freedom of choice within a corporate portfolio of pre selected suppliers. But one should be aware: a international fleet policy is only implementable in combination with a strong change management approach and the respective buy-in and alignment process on corporate and local level.”

Urs Haymoz, Managing Director of HAYMOZ Fleet Performance, believes in the trend toward a professionally based fleet management policy.

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oday our services are built on an international consolidated Management Information System on fleets, including outsourced fleet management, country based vehicle bidding, centralized invoice control and other services”, says Mr Haymoz. “Our business model is strictly based on performance – TCO/CO2 performance of each single car – and supported by a high degree of standardized IT systems and web based tools which are used today in more than 35 countries on our fleetDECK® platform. Our focus is on large international fleets, covering all major industries. Today more than 60,000 cars operating in 70 countries with more than 80 leasing providers are centrally managed, assessed and controlled.”

INDUSTRY Partner

José Luis Criado, LeasePlan International

Insight and control With 17 years with LeasePlan and 6 years as an independent consultant, José Luis Criado is now in charge of LeasePlan International. With this extensive experience, he understands both LeasePlan’s values and objectives and has a good overview of issues from different perspectives. We discuss international fleet management anno 2011.

n You left LeasePlan for 6 years, what is your first impression of the company? JL Criado: In the last 6 years, many changes have occurred in the market and logically also within the LeasePlan organization. As one of the most evident changes in LeasePlan, I would mention the outstanding improvements in the technological fleet management tools and the overall improvement in the qualification of the staff. In short, in order to meet their client’s demands and needs, LeasePlan had to grow with the market and significantly improve internal efficiency.

How do you feel the market of global fleet clients is evolving? JL Criado: The fleet market, as did many other markets, struggled the last few years, and this struggle has been two-fold. On the one hand car leasing operators had to face their client’s diminishing business due to staff reductions and other cost measures, n

and on the other hand, specific industry issues such as losses in the remarketing of cars coming out of contracts. However, due to the fact that outsourcing of fleet management is an efficiency driven decision by the client companies, most of them did not consider cutting down on car leasing, they simply wanted to further rationalize their cost base. Global deals are one, or probably several, steps further into the fleet efficiency achievement. Therefore, more and more companies that have fleets in several countries welcome a solution that allows them to benefit from global control processes and tools. So yes, there is an increase in the number of global deals. What are your objectives with LeasePlan International on short and medium term? JL Criado: Signals of market recovery are seen in most markets and LeasePlan has

José Luis Criado about the most important trends for the next years

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Driver safety, cost efficiency, emissions management, implementation of the new lease accounting standards and concepts such as mobility management, telematics, tracking and pooling, are all important priorities for the future.

José Luis Criado is the new managing director of LeasePlan International.

Visit Fleet Europe to read more www.fleeteurope.com

emerged from the past years in a much stronger position. At LeasePlan International we want to expand our services to include all international companies that have multicountry fleets and provide them with levels of control and efficiency that will allow them to make better decisions for their companies. n How do you see the further growth of LeasePlan International? JL Criado: LeasePlan International’s growth is inseparable from the growth of the LeasePlan Group which encompasses 30 countries. LeasePlan International grows with these countries. And similarly, the more LeasePlan International grows serving multinational companies, the more business can be referred to the country operating companies. The LeasePlan Group is geared to grow and LeasePlan International is going to continue to lead the growth among multinational companies.

Tools and expertise have always been at the heart of LeasePlan. JL Criado: We are continuing to develop the expertise and the tools required to help international clients. The LeasePlan International client has very specific needs and objectives. It is all about insight and control; insight in order to have the necessary information to make the right decisions and control in order to implement these decisions and realize an effective global fleet policy while acknowledging differences between countries and making the most of them. Therefore, we will continue to provide our clients with the necessary tools, advice and support helping them to select and implement the best alternative for every situation.

Caroline THONNON

Luc Sano, SAAB

“Growth in fleet” Luc Sano has been appointed as the new international fleet manager for SAAB. The company has gone through tough times since the split with GM and the takeover by Spyker Cars, with a direct impact on fleet sales, on residual values and thus on leasing prices. With a new model line-up coming, and the regaining of trust in the brand, Luc Sano is now building the European fleet organization with fleet sales being a priority for Saab. n The third pillar of your objectives would

be the relationship with lessors? L.Sano: Exactly! It is the same story of regaining trust and getting on the shopping lists. Except for Belgium, Saab does currently not have a captive leasing company. In the coming months, I’ll be working to find business partners be able to provide financial services to the customers. With a focus on the 6 direct dealer countries. Having a strong financial arm is also important as they could cover the whole of the dealers’ sales.

n Can you discuss the fleet results in 2010? L.Sano: In total, we sold 32,000 vehicles in 2010, with about 40% of our sales volume in fleet sales.

n What is the client focus? L.Sano: Firstly, small and medium enterprises. They never lost their interest in the brand and we have models that perfectly fit their needs. Today, it is still a little too soon to actively target the big multinationals, but even in this segment, we regularly receive requests. But as soon as the fleet organization is in place, our premium brand will be ready to pursue them more actively.

ePower n Could you explain the concept of direct

dealer countries? L. Sano: Most of our dealers are very loyal to Saab. I have never seen this before in my career. We have around 300 dealers throughout Europe, and we’re not looking for new ones. The direct dealer concept avoids an extra

Ongoing momentum in 2010 sales • Sales momentum continues to grow quarter by quarter • 11,448 cars sold in Q4 2010, up 129% compared to Q4 2009 and up 31% compared to Q3 2010 • Global sales in 2010 amount to 31,696 cars • Total 2010 production rose to 32,048 units, up 53% compared to 2009

Luc Sano: “We need to show the future of Saab, because it is looking good!”

What are the next steps in strategy and products? L. Sano: We have appointed a neutral consultant to analyze all the components of the Total Cost of Ownership. We know that residual values are not currently at their best, but all the other elements are. This consultant interacts directly with both the development teams and the distributors. As soon as they are ready with their study, we will be ready to communicate to the market. The next challenge is implementing a remarketing program for the dealers, again to support the residual values. A big challenge is the launch of the 9-5 Wagon, and also the first crossover vehicle 9-4X. As with all brands, Saab is investing heavily in green engines, low emissions and electric vehicles. We are taking our first steps towards developing an all-electric vehicle with the Saab 9-3 ePower. It offers its occupants the comfort and size of a saloon with a 135 kW/184 hp electric motor driving the front wheels, offering a driving range of about 200 km. n

Caroline THONNON

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What is your role as international fleet manager? L. Sano: My role is threefold. First, it is about creating a fleet team throughout Europe. In Italy, Spain and the Benelux, Saab already has a local fleet manager. We are looking for the right people in France, Switzerland and Austria and in Germany. As fleet is really a major ambition, they will report directly to the local managing director. The second part is building and rebuilding the relationship with the residual value setters. Our current RV’s are not particularly encouraging since the split with GM. But the situation is already improving again and we are trying to reinforce this through our international contacts. Later, our team will also be in direct relation with the RV setters locally. All this will have a direct impact on the leasing prices and our fleet market share. n

link between the manufacturer and the dealer. This organization fits with Saab and helps avoid extra costs. The dealers therefore interact directly with Sweden, which in many cases can shorten the process time.

INDUSTRY Automotive

Market

The opportunities of the Post Recession It may be perceived wisdom that the EU is emerging rapidly from a period of fairly deep recession, but the picture is far more complex. Consider some of the current evidence.

Professor Peter N C COOKE

t the consumer end of the market, the one which drives everything, retail sales in the Euro zone were down 0.6% in the quarter – a cumulative 0.9% down over the full year versus an expected 0.2% year on year improvement. Equally, the negative reports were at their strongest in Malta, Ireland and Lithuania while Poland and Portugal showed the biggest progress. Unemployment in the Euro zone is currently 10 -10.1% – the highest since the Euro zone started in 1999 – and austerity programmes are starting to bite, causing further concerns regarding unemployment. However, the core Euro countries would appear to be doing better.

At the other end of the business spectrum – raw materials, food and energy – input prices have been soaring at an almost unprecedented rate.

Plan for the future How does one reconcile these headlines with the way the company car is emerging from recession? Is it coming out ahead of the game – or could the company car become an endangered species? ‘Recession and recovery’ is a two part exercise. During a period of recession the vehicle operator does everything possible to reduce costs, although those cost saving strategies may have longer-term implica-

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Figure 1 - EU15; New Car Sales by Class – 2000-2010

New car sales in the European Union has stabilized, but you can’t say that we’re already back on track. Source; ACEA

tions. The recession from which industry is recovering is the current writer’s fourth recession and most of the standard actions are essentially the same – ‘cleanse the fleet and then look for cost savings compared to where we were before’ is one perhaps dated strategy. The current policy, hopefully being adopted by all forward-thinking fleet executives is perhaps more pragmatic, ‘cleanse the fleet, plan for the next shape of business and refleet cost effectively against that new business model’. Quite simply – plan for the future – not replace for the past. That may mean intermediate vehicle provision as discussed later in these notes. Recession led to a drop in demand for used cars which, in turn, led to an often dramatic drop in residual values. In the United Kingdom, for example, fleet and leasing cars at auction prices dropped by over £1,000 per unit over six months – and recovered just as quickly. To the leasing company a drop in average used car price achieved at auction would be a disaster – trade-in 1,000 units a month and that could be a million pounds lost in a month...not an outcome to please the shareholders. The response was for forward-thinking leasing companies, and indeed many fleets that purchased their vehicles outright, to extend their replacement cycles. To the lessee, a few months longer for selected vehicles, provided the price was right, was no major concern and it was widely accepted. The downside of not taking such action could be a significant loss and a bunched fleet which had to be replaced later. That is what has happened with a lot of leasing companies and organisations which buy their own vehicles.

Figure 2; Checklist for Fleet Restructuring Post Recession • What is the new business model/car fleet requirement post recession? • What employees should no longer qualify for a company car? • What new employees/job grades justify a company car in future? • What models will be most fit for purpose in future? • What are expected mileage/fuel requirements in future? • When will changes be introduced/is short-term leasing needed? • What is the most cost-effective way of providing future fleet demand? • What contract periods should be sought for future fleets? • Can the fleet/elements of the fleet be downsized? • Who will managed/what management structure for the future fleet? • What steps need to be taken to ensure drivers are still happy?

with a growing number of organisations taking a six month lease, while the business is restructured, and then all business car users can be dropped into the next structure in one fell swoop. Use of mediumterm rental would provide sufficient cover to be able to regroup and restructure. The recession and recovery scenario has still wider implications. For perhaps the first time, ‘globalisation’ is having a real impact

“ Recession and Recovery is a two part exercise. ” Reduce the flow of ex-fleet and leasing cars to the used car market, however subtle it might be, and there is a risk that equilibrium may be disturbed. The shortage of appropriate used cars will drive up auction prices which, in turn, may knock straight through to the used car market driven by the simple rules of supply and demand. The definition of the new business strategy mentioned earlier suggested that the true forward-looking fleet will be looking to replace vehicles to match the new business model, not the one in place before recession. Such a change in focus would appear perfectly logical. However, there may be cases where these changes have not been fully implemented, or other issues mean a compromise, intermediate situation may be the most effective. Such a ‘fleet in transition’ stage is manifesting itself in many places and ways, but one of the most interesting phenomena is the growth in ‘short-term leasing’. Again, this is increasingly being reported in the UK

on business and the business model – and forcing organisations to rethink their costs and cost models. One area which is showing signs of suffering is the level of cars being provided within fleets – Figure 1 shows how in the EU15 the mix of new car sales has changed in recent years. There is a distinct polarisation in the marketplace with the importance of smaller, less expensive and cheaper to run cars increasing in popularity at the expense of lower middle and mid-size cars. This change is, in part, due to ‘model inflation’ – more value for money packed into an ever smaller package and, in part, due to the need to cut costs. The higher level of cars is being held because they are principally run by executives – but we will not go there. The increasing price of fuel, growing austerity measures and a need to protect jobs, as well as businesses needing to protect flexibility, is likely to drive growth in terms of daily rental in the corporate sector. The cost of providing low mileage company cars,

when expressed in terms of business use is escalating to an unacceptable level. It may well pay an organisation handsomely to evaluate the possibility of renting senior/middle management perk cars if such traditional drivers need a ‘car for business’ on an occasional basis – and give a salary increase as recompense. There are some examples starting to come through in the United Kingdom. These notes have examined a wide range of issues. The exact position of the fleet in the European context may require further refinement. Each of the changes may not have a different effect on different markets in which you operate. The concept of ‘one size fits all’ disappeared with the last recession. This time its ‘bespoke fleets for markets’. In summary – recovery from recession is offering the fleet executive a once in a lifetime opportunity to upgrade the fleet and bring it in line with future needs rather than past provision. The question is – ‘are you doing it?’ – look at the questions in the Figure 2 for starters – how does your business measure up? n

Professor Peter N C Cooke University of Buckingham

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Extended cycle A recent report in the United Kingdom has suggested that a growing number of fleets are increasing their replacement cycles – some to five years and 150,000 miles – even if this is moving into ‘unknown territory’. While the fifth year is still the exception, an increasing number of players are either doing it or looking seriously at the risks and benefits. Reports suggest the vehicles are generally standing up to the longer replacement cycles well. The implications on the other side of the equation are interesting with regard to the extended replacement cycle. True costs of replacement cycles and replacement cycle planning may require a new business model but, perhaps most importantly, the absolute volume of vehicles required for fleet operations may begin to decline. We may have to wait another year or so to see how this phenomenon develops. An extension in replacement cycles will inevitably lead to a drop in the absolute number of used ex-fleet cars coming to market, whether that is through dealers or going to auction. Any such reduction will have a knock on effect to the used car marker which, in reality, is the market that drives demand for new cars.

INDUSTRY Automotive

Fuel

Risk of considerably higher oil price remains Fuel consumption is, of course, a major factor in fleet management. Fleet managers do, however, attempt in vain to estimate the oil price trend. But which factors actually determine this price? Jos STERK

here are, naturally, various factors that impact on the price of oil, both positively and negatively. The first of these factors is, of course, the economy. When the economy grows, consumption will increase. In that case, a barrel of crude oil will logically become more expensive. In addition, supply and demand play a role, and this relationship is not always easy to estimate. The major oil companies have been unable to increase oil production to any great degree, despite heavy investments. This is true first and foremost of companies operating in countries that are not members of OPEC, the cartel of oil-exporting countries. OPEC has therefore increased its market share again and consequently acquired greater control over the oil market. New sources of oil have been found in places that are (more) difficult to exploit, with the result that production is more expensive and inevitably the price goes up. On the demand side, the picture is clearer, because this is showing an upward trend mainly as a result

of the sharp rise in demand from growth markets such as China and India. According to the US Department of Energy, this year the world will consume an average of 88 million barrels of crude oil a day. Consumption has never been so high.

Middle East Tighter supply and higher demand automatically lead to price rises. The question is, however, how high can the price of oil go? In practice, this is difficult to predict, as in addition to supply and demand, other factors play a role, the most significant of which is probably the geopolitical situation. Crude oil is taken to its destination in huge tankers and a disruption in tanker traffic can have serious consequences for the oil price. This became clear when political and social unrest broke out in the Middle East in the first few weeks of 2011. The price of Brent - the North Sea variety of crude oil – immediately rose to over 100 dollars a barrel. The difference com-

Light Crude Oil (Pit) 130.00 110.00 90.00 70.00 50.00

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30.00

As you can see, the oil price hit a peak in mid-2008 at the start of the financial crisis. Thereafter the price per barrel fell again, but in 2009 the price of Brent oil crept steadily up again.

pared with West Texas Intermediate – the leading American variety – at once increased to more than 10 dollars. This meant that the oil market is taking into account the fact that supplies in Europe in particular may be at risk. Most of the oil used in Europe comes from the Middle East. If the Suez Canal were to be closed, the price of oil could instantly go through the roof. Oil dealers’ worst nightmare, however, would be if Saudi Arabia were to be confronted with the same problems as Egypt. Saudi Arabia is the world’s biggest oil producer. The above cocktail of factors means that it is difficult to assess how oil prices will develop. The mechanisms that operate between the exploitation of oil to its transportation and then processing may not falter at any time, otherwise the price of oil goes up. This means that oil is always of particular interest to speculators, whose behaviour is completely unpredictable. For instance, it became clear after the event that speculators played a major role in the record price of 140 dollars per barrel of crude oil reached in the summer of 2008. It is impossible to say to what extent speculators again have the oil market in their grasp at the moment. Nevertheless fleet managers do better to keep an eye on the trend because fuel costs account for between 20 and 25% of the Total Cost of Ownership of a fleet. More expensive fuel means higher costs, of course, but on the other hand cars are becoming increasingly economical. Nevertheless, it seems advisable where possible to integrate long-lasting and fuel efficiency cars into the fleet, because if the price of oil were to fall, then you record twice the profit. n