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LEASING & RENTAL FOCUS How the leasing industry can help drive uptake of greener vehicles and provide assurance in uncertain times 44 Interview: BVRLA’s Gerry Keaney How can the leasing and rental industry help drive forward the government’s carbon reduction and air quality agenda? And what should the government be doing to speed up the uptake of zero and ultra-low emission vehicles? The BVRLA’s CEO Gerry Keaney gives his views
46 Tackling fleet industry challenges There is a plethora of major issues that must be tackled by fleet decision‑makers to ensure company car and commercial vehicle operations remain cost-effective and operationally efficient, writes ICFM director Peter Eldridge
52 Panel of Experts: Leasing & Rental Has there ever been a more persuasive argument for leasing or long‑term rental than now, given the economic uncertainty and the question mark over the future of diesel? We ask our leasing experts Mark Gallagher, Rob Mills and Chris Chandler for their views
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INDUSTRY ASSOCIATION
Expansion plans for the BVRLA announced The BVRLA unveiled its expansion plans, which involves recruiting new staff to increase the capacity of its compliance, communications and policy teams. The association has also brought in expertise from external public affairs specialists to support its campaigning work. A new website has been commissioned and is on schedule to launch later this year. This busy start to the year marks the start of the association’s recently published Three-Year Plan, which outlines the BVRLA’s intentions to achieve stronger industry representation, be a louder voice of influence, collate deeper industry insight, have a wider service offering and bring greater value to members. BVRLA chief executive, Gerry Keaney
Arnold Clark, who takes up the role of Chair of the BVRLA Rental Committee. Margaret replaces Brian Swallow from Enterprise, who steps down after his two-year term. The BVRLA has also been paying tribute to one of its founding fathers, the late BVRLA Honorary Life President Freddie Aldous, who passed away in December 2017. The association will be naming its conference room the Freddie Aldous Room and they will be introducing the Freddie Aldous Lifetime Achievement Award to be presented annually at the association’s industry Dinner. READ MORE tinyurl.com/y9wx4gv7
MOBILITY
BUSINESS GROWTH
Europcar relaunches as Europcar Mobility Group
Ogilvie Fleet reports 30 per cent rise in short‑term hire bookings
Europcar has re-branded as Europcar Mobility Group to reflect the diversity of its offering. Since 2014, Europcar says it has transformed its activities beyond the historical car rental business by becoming a global provider of mobility solutions, offering car rental, van and truck rental, chauffeur services, car sharing and peer-to-peer car-sharing. The Group’s recent growth strategy has included a number of acquisitions, including Ubeeqo, a European start-up specialised in car-sharing, and Brunel, a provider of chauffeur services. More recently, the Group also bought Scooty, a scooter-sharing start-up. The Group also took minority investments in Snappcar, the second largest international peer-to-peer car-sharing player in Europe, and Wanderio,
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said: “We have invested heavily to give the association what is required to meet the needs of an increasingly diverse membership. Our members are operating in a dynamic sector and their core business activities are expanding to meet customers’ increasingly complex needs. We too are expanding and are looking at introducing new member categories, which will further increase the diversity of our membership.” Nina Bell has been made the new vice‑chair on the Committee of Management, replacing Simon Oliphant. Nina will support BVRLA chairman Matt Dyer for one year, then take up the role as BVRLA Chair for two years before reverting back to vice-chair. Joining Nina on the Committee of Management will be Margaret Speirs from
a multimodal search and comparison platform. The Group also continues to strengthen its original vehicle rental expertise; in 2017, it acquired low-cost rental company Goldcar and Buchbinder, one of the major vehicle rental leaders in Germany. “We needed a name that brought to life the transformation of the Group for our future developments, using the strength of our historical business and our number one position in vehicle rental. The name Europcar Mobility Group capitalises on the Europcar brand, whilst also providing the mobility context for future acquisitions,” said Caroline Parot, the company’s CEO. READ MORE tinyurl.com/ycczrrle
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Independent contract hire and fleet management firm Ogilvie Fleet has reported a 30 per cent year-on-year increase in short‑term hire bookings. Jim Hannah, operations director, explained that a variety of factors were behind the success, including a very direct business strategy and 1link Hire Network technology provided by epyx. “We have developed a dedicated, focused hire team that keeps things simple and focused. As well as supporting our clients when they need us, we take a proactive approach to seeking out opportunity within our client base and elsewhere. “The 1link Hire Network e-commerce platform has also played a key part in our expansion, allowing us to manage our large supplier base through one solution. This gives us the freedom to choose the supplier that best fits each rental requirement on the day. “Being able to use a single platform in this manner is important to us. It provides us with flexibility in the marketplace in terms of our supplier management, but
also allows us to support our customers with their booking requirements by offering the facility of the direct booking platform provided by epyx.” The Ogilvie rental proposition is to offer blanket national coverage by utilising the combined rental fleets of all the major UK suppliers, while giving customers a choice ranging from small city cars to 3.5 tonne light commercial vehicles of different kinds. Jim said: “A key part of our rental management service is recognising that hires happen for a wide variety of reasons, from onward travel at airports and as an alternative to grey fleet to medium-term flexi‑leases for longer term needs. “What we aim to do is not just accept a simple booking but to find out about each customer’s real world requirements and help them to identify the best solution, whether they are an SME, a large corporate or public sector organisations.” READ MORE tinyurl.com/y6uhsgek
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ELECTRIC VANS
Arval produces guide on operating electric vans Arval has launched a guide on the day-to-day management of electric vans. Delivering the Future: A Guide to Operating Electric Vans is designed to provide expert guidance for organisations that are considering adding electric commercial vehicles (ECVs) to their fleets. Simon Cook, LCV Leader at Arval, said: “Fleets are starting to really think hard about introducing and operating these vehicles.
Our thinking, in putting this new guide together, was that there is a gap in the information being provided to fleets when it comes to their everyday operation. Cook continued: “Delivering the Future’ is designed to quickly familiarise fleet operators with the main practicalities when it comes to operating ECVs.” READ MORE tinyurl.com/ybsbw23c
NEW APPOINTMENTS
Avis Budget Group’s Nina Bell becomes first female vice-chair of BVRLA Nina Bell, managing director of Avis Budget Group for the United Kingdom (UK) and Scandinavia, and Zipcar UK, has been appointed as the first female Vice-Chair of the British Vehicle Rental and Leasing Association (BVRLA). Her post will see her occupying the position for a year, before progressing to Chair in 2019. Introducing Nina as the new Vice Chair, BVRLA Chairman Matt Dyer said: “Nina has made a significant contribution to the sector in her role as managing director of Avis Budget UK and she has made a valued contribution on the BVRLA board since 2015. We are delighted to announce her as our first ever female Vice-Chair.”
Nina Bell commented: “I am delighted to have the opportunity to play a more active role within the BVRLA and give back to the industry I have worked in for over 20 years. I am especially proud to be the first female Vice-Chair. We are seeing an increasing number of women across the industry, and I believe that my appointment underlines the Association’s commitment to ensure representation of our very broad and diverse member base.” READ MORE tinyurl.com/y8sm3krn
EXPANSION
Alphabet expands into Irish market Alphabet International will now be operating in Ireland through a cooperation agreement with Denis Mahony (Contract Rentals) T/A Avis Fleet Solutions. Local small and medium businesses as well as international corporations with offices in Ireland can now benefit from Alphabet’s portfolio of operational leasing and financial leasing products. Companies in Ireland can now use Alphabet’s complete range of Business Mobility solutions, including personal leasing, short‑term car hire, full operational leasing, and sales and leaseback as a
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financed product. Depending on their transport needs, businesses can also access Alphabet’s range of add-on mobility products and services, including fuel cards, replacement vehicles, roadside assistance and legal insurance. Alphabet will cooperate with Avis Fleet Solutions to seamlessly roll out its offering in the local market. Both companies confirm that Ireland has a lot of potential for their businesses.
The changes that will impact fleet operations: dates to make note of Companies with vehicle fleets should make note of some important dates that could have an impact on their business. A number of key changes, some already made, are likely to have a dramatic impact on organisations in both public and private sectors, depending on the types of vehicles operated, and where they are being driven. 1 April 2018: VED Increase – This is affecting all cars, however diesel is being hit the hardest. They go up by at least one VED band for the first year. Plug-in hybrids are not exempt from the rise. 6 April 2018: BIK Increase – The diesel supplement increases from three to four per cent, unless vehicles are RDE2 compliant, however no RDE2 vehicles are available yet. 1 September 2018: WLTP – The ‘Worldwide Harmonised Light Vehicle Test Procedure’ (WLTP) becomes mandatory for all manufacturers from 1 September 18. This will be declared as a supplemental figure alongside current NEDC (New European Drive Cycle) CO2 ratings. April 2019: London ULEZ – The current Congestion Charge Zone will also become the Ultra Low Emission Zone, which means cars and light commercial vehicles less than EU6 diesel or EU4 petrol will pay a £10 T-Charge (toxic-charge) on top of the normal congestion charge. This will be operational 24/7, 365 days a year. April 2020: Revised CO2 Thresholds – the HMRC is to take a view on the WLTP testing and decide whether to adjust the CO2 BIK Bands to reflect the higher figures being seen. The EU directive is that they cannot be punitive to drivers, so expect the rates to reduce in line with the WLTP vs NEDC figures. 1 January 2021: RDE2 Mandatory – The Real Driving Emissions test stage 2 (RDE2) becomes a mandatory with WLTP, therefore all new diesel cars after 1/1/21 would go back to three per cent supplement for BIK. Through Grosvenor Leasing’s 0Zone service, we’re guiding fleets through the changes and how to plan ahead. We’d be delighted to speak to anyone needing advice on 01536 536 536.
Mark Gallagher is Grosvenor Leasing’s green fleet specialist offering guidance and support as part of the company’s innovative 0Zone solution. FURTHER INFORMATION
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www.grosvenor-leasing.co.uk
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Leasing and the green agenda How can the leasing and rental industry help drive forward the government’s carbon reduction and air quality agenda? And what should the government be doing to speed up the uptake of zero and ultra-low emission vehicles? GreenFleet chats to BVRLA’s CEO Gerry Keaney to get his views What are the benefits of leasing over outright purchasing for zero and ultra-low emission vehicles? Many of the long-standing benefits associated with vehicle leasing are particularly attractive when it comes to fleets and people looking to adopt zero or ultra-low emission vehicles. These vehicles are expensive and leasing companies can pass on the purchasing discounts they get from buying so many of them. Leasing enables you to fix the cost of your vehicle acquisition over a set period, meaning that you don’t have to stump up a lot of money up-front. This can be particularly attractive for businesses that would like to use that working capital elsewhere. With the most popular form of leasing, contract hire, you never actually own the vehicle. This means that you are immune from any risk associated with that vehicle’s residual value. Should a vehicle’s residual value fall sharply, perhaps due to the introduction of a new range of much more efficient electric vehicles, the leasing company will have to absorb this cost. One of the most attractive elements of leasing vehicles, particularly those that are using new technology, is the ability to get advice and package up a range of other services within an additional fleet management fee. This means that you can fix your maintenance costs and benefit from lots of leasing company advice on what type of ultra‑low emission vehicle you should choose and how you should use it.
How can the industry help with the air quality agenda? BVRLA members own and operate nearly five million cars, vans and trucks. These are some of the youngest and cleanest vehicles on the road. They will play a vital role in tackling the air quality issues faced in the UK by providing a range of finance and rental options for companies that need to upgrade their fleets to meet Clean Air Zone or Ultra Low Emission Zone standards. They will also help
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drive behaviour change in our towns and cities, helping businesses and individuals to reduce non-essential car use and ownership by relying more on pay-as‑you-go vehicle rental and car club services and using more public transport. The rental and leasing industry will drive the uptake of ultra-low emission cars, vans and trucks, helping UK businesses and individuals to choose and finance these vehicles
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and then recycling them into the used market for the next generation of customers. Finally, we are also working with government to help it develop a roadmap for zero-emission motoring that takes a co‑ordinated approach to tax incentives and infrastructure. What should the government do to incentivise the uptake of greener vehicles? The Company Car Tax (CCT) regime is one of the government’s most powerful tools in influencing the behaviour of businesses and individuals. A fair, consistent and well-signalled system can play a vital role in helping the government to meet its policy goals. We believe that the Treasury has a tremendous opportunity to accelerate this process and accentuate the results with a simple realignment of the CCT regime. Over the last two decades, the vehicle rental and leasing industry has embraced the introduction of emissions-based motoring taxes and used the incentives they provide to deliver a sustained and substantial reduction in average CO2 emissions. Using the CCT regime, BVRLA members have worked with their customers to reduce their carbon footprints, embrace alternative fuel types and explore other more sustainable modes of transport. This progress is now at risk. Average CO2 emissions are rising and employers are taking less responsibility for the vehicles and modes of transport that their staff are using. The BVRLA would like to work with the government in delivering a more effective company car tax regime that supports its policy objectives, protects revenues and provides a fair, consistent and well-signposted direction for taxpayers.
The Company Car Tax (CCT) regime is one of the government’s most powerful tools in influencing the behaviour of businesses and individuals. A fair and consistent system can play a vital role in helping the government to meet its policy goals The government should bring forward the scheduled introduction of a new, reduced two per cent Company Car Tax (CCT) rate for electric vehicles to incentivise the right purchasing choices. The CCT rate for these vehicles is currently set to increase for the next two years, up to a rate of 16 per cent in 2019/20 before falling to two per cent in 2020/21. There are indications this cliff-edge is acting as an active deterrent to potential buyers, who are putting off the adoption of an electric car.
What are the main fleet concerns for 2018? At Grosvenor Leasing, we’re proud of the 98 per cent satisfaction rating in our latest customer satisfaction index (CSI) survey, with the majority of our clients ranking us as either ‘good’ or ‘excellent’ as a business. The annual CSI is an important exercise for us, mainly because it also enables us to gauge opinion on key issues affecting companies with vehicle fleets. This year we asked what were the main things concerning our customers. Forthcoming changes to taxation, emissions testing and how that would affect them were rated as the biggest worries, with most companies agonising over what bearing this will have and what they should be doing. The potential impact of rising interest rates was second on people’s minds as we all watch the Bank of England, and the broader economy in the run up to Brexit, to see when rates will start to climb – which they inevitably will. GDPR was next on the list, then the broader green agenda followed by health and safety matters. It clearly shows that the debacle over how WLTP is being rolled out by the government is the main worry for businesses with fleets. The changes to emissions testing should have been such a positive move, but right now the transition is causing problems. To make matters worse, some manufacturers seem to be making pricing and specification changes at this sensitive time causing an increase in the on the road price, a rise in CO2 (in anticipation of WLTP), and a reduction in discounts. It means, in some cases, drivers will pay higher benefit in kind than they’d calculated when ordering the car. In one extreme example of an executive car, the figures have changed dramatically; the driver being hit with almost £80 of additional tax per month than originally expected. The advice we are giving our clients is to keep talking to us, as it’s a situation changing constantly and one that we are monitoring very carefully. Even if you aren’t a Grosvenor Leasing customer, we’re always happy to give advice and we’d be pleased to hear from you if you have questions that our experts can help answer.
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Mary Dopson is Grosvenor Leasing’s customer services director with over 25 years fleet sector expertise. FURTHER INFORMATION www.grosvenor-leasing.co.uk Mary Dopson
What are the other alternatives to outright purchasing that are gaining momentum? Car clubs provide convenient and affordable access to vehicles on a 24/7 basis, and can provide a great alternative to car ownership for many city dwellers. Cars can be booked online or by phone, weeks ahead or with just a few minutes’ notice, for anything from a few minutes to a weekend. Many organisations are now embracing corporate car clubs as a way of providing similar benefits to their employees, reducing the need for inefficient and poorly‑managed pool cars or grey fleet. L FURTHER INFORMATION www.bvrla.co.uk
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Leasing & Rental Written by Peter Eldridge, ICFM director
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Keeping cost‑effective and efficient There is no single challenge, but a plethora of major issues that must be tackled by fleet decision‑makers to ensure company car and commercial vehicle operations remain cost-effective and operationally efficient, writes ICFM director Peter Eldridge Fleet operators are not averse to change, but they will not expose themselves or their businesses to risks. In recent years fleets have broadly continued to ‘do what they have always done’ because there has been no ‘big bang’, but that changes in 2018 and into 2019. There is no single challenge, but a plethora of major issues that must be tackled by fleet decision-makers to ensure company car and commercial vehicle operations remain cost-effective and operationally efficient. Tax changes Vehicle and company car benefit-in-kind tax changes mean fleets must review whether diesel remains a fleet favourite, or whether petrol, hybrid and plug-in options have a home with a more ‘balanced’ approach to powertrain choice.
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well as Clean Air Zones. Getting to grips with Simultaneously, the impact on company the April 2019 introduction of the London car choice lists and vehicle-related taxation Ultra-Low Emission Zone is also a of the Worldwide harmonised Light priority, while the city’s Mayor vehicles Test Procedure must be A Sadiq Khan is also promising tackled as more information a r Zero Emission Zones could becomes available. o h plet ssues be introduced in some Today’s Euro 6 emission i or j a y parts of the capital as cars produce more m b f o ckled ers soon as 2020 in a bid to a power and torque t e b accelerate the roll-out with lower CO2 rates must cision‑mak y e n d of electric vehicles. when compared a t p e e m fl o c e r with traditional u s to en r and CV Data petrol‑based engines. n i ca a overload But the government’s m e sr ‘Big data’ and all that it ill-informed “all diesels erationfective p o f entails can be added to the are dirty” obsession will e ‑ cost above challenges. This includes filter down through to local the connected car, the internet authorities. That could mean an of things, cyber security concerns avalanche of local diesel surcharge and the recent (25 May 2018) introduction parking schemes to boost council coffers, as
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of the General Data Protection Regulation (GDPR), which notably impacts on the sharing and using of personal vehicle user data. What’s more, fleets must be aware that on 1 January 2019, new international lease accounting standards will be introduced, which require leased assets to be reported on company balance sheets. The above list is far from exhaustive and I’ve not even touched on Brexit and the impact that no trade deal could have on fleet operations, notably in respect of potential new vehicle delivery and spare parts order delays due to border customs changes and price increases. Encouragement to go green From a ‘green’ perspective fleet decision-makers require encouragement to introduce plug-in vehicles with powerful financial arguments essential to drive environmental policy changes. However, for UK fleets electric vehicles remain a conundrum. What’s more, plug-in hybrid cars are, for a significant number of fleet managers, the proverbial duck out of water, operating predominantly outside of their economic efficiency zone with the typical view being that higher operating costs – and specifically fuel bills – would be the result when compared with equivalent diesel models. The corporate sector is responsible for buying the majority of new cars in the UK – a 55.8 per cent market share last year according to the Society of Motor Manufacturers and Traders. But for fleet managers to drive along the plug-in vehicle road in significant volume, they must feel confident about electric vehicle technology and vehicle recharging as well as plug-in vehicle residual values and operating costs. They must also resist company car benefit-in-kind tax ‘loophole’ vehicle choices – specifically plug-in hybrids – that were not fit‑for‑purpose and not be drawn into poor fleet vehicle decision‑making due to fuel type ‘demonisation’ of diesel in recent months. Plug-in vehicles must be attractive to mainstream fleet operations in terms of technology and cost and currently there remains too many unknowns across a sector that remains embryonic in terms of sales. ICFM members want to see clear government strategy that they can ‘hang their hat on’. It is key for fleet managers to meet operational requirements. But fleet professionals need to have the right tools for the job and need to look to the future and be able to react and set policies. Moving forward there is no definitive right fleet fuel, but vehicle operations will feature a mix based on fitness-for-purpose. To move away from the traditional internal combustion engine, fleet decision-makers require encouragement to introduce plug-in vehicles with powerful financial arguments essential to drive environmental policy changes. Shifting business model Meanwhile, the worlds of fleet management and travel management are colliding at a rapid rate, driven by technology and ‘big data’ that will underpin BMaaS and the move to a total cost of mobility concept – understanding the full cost of employees travelling from A to B and not just the vehicle cost. Telematics is becoming far more key and there is greater reliance on a communications platform. The business model is shifting to car services because of ‘big data’. The industry is moving from being asset – the vehicle – driven to be focused on employees and their movements. Massive momentum is being built so fleet managers need to think about their operational model. Companies could look to set a mobility budget for each employee that will influence the mode of transport they take – company car, car club, car share, car hire, public transport or whatever – based on a range of factors including fitness-for-purpose, cost, convenience and safety. Employees will be able to access travel options via their own portal, make bookings and keep a track of their budget. The journey to mobility on demand is occurring very quickly. There will be ‘big bangs’ aplenty over the next 12 months, which will, ICFM believes, be a watershed period in the history of fleet. L
WLTP and its impact on fleet operations
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The move towards WLTP is now in full flow and manufacturers are all frantically trying to get their house in order ahead of the switch on 1 September. This is causing unprecedented turbulence within the fleet industry as some manufacturers are increasing their prices, upping their CO2 ratings and declining orders. The consequence being increased costs to companies with vehicle fleets, increased BIK tax for some drivers and, for other drivers, the disappointment of a declined order. To put the scale of the problem in perspective, there are somewhere in the region of 11,000 different cars available to order at the moment. Drivers and companies need accurate data to make a decision and the leasing sector is reliant on receiving that data for its quotation and ordering systems. The situation is made worse because some new models being introduced have significantly higher CO2, so any old model stock is disappearing quickly. Normally, when a model is discontinued, the replacement/new model is released before the stock of the old model is utilised. However at the moment, we are seeing old model availability diminish completely, even before the release of the replacement model for ordering. The situation is complicated further because, in some instances, there is not a discontinued model with a new replacement model. It is simply an increase in CO2 (and sometimes price) to an existing model and this makes it almost impossible to administer – especially when we have seen CO2 increases of 30 per cent (or £30 per month in Class 1a NIC). It is also worth noting that manufacturers are also reducing their published MPGs in line with the increases in CO2 ratings, albeit not necessarily at the same time. Grosvenor Leasing is recommending companies with fleets not to make any radical changes just yet. But you should be warned that drivers who are no longer able to order the vehicle they were hoping for may face disappointment and time-wasted. We are preparing new whole life cost lists over the coming weeks that will identify any significant movements applicable to the vehicles on our clients’ policies and, in the meantime, we are reviewing each order on an ‘order by order basis’.
James Parnell is Grosvenor Leasing’s head of purchasing with over 10 years fleet sector expertise. FURTHER INFORMATION www.grosvenor-leasing.co.uk James Parnell
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Advertisement Feature
Grosvenor Leasing’s 0Zone service helps fleets reduce emissions Transport accounts for 40 per cent of total energy consumption in the UK, making companies operating vehicles fleets a prime target by the Government under the green agenda It’s not a case of ‘if’ companies decide to go green with their fleet, its ‘when’, and with financial incentives acting as the carrot to shift businesses towards ultra‑low emission and electric vehicles, and increasingly harsh penalties being the stick, companies that don’t act soon will find their fleet becomes far more expensive to run. That’s why Grosvenor Leasing is helping companies in both public and private sectors achieve increased efficiency and savings through its 0Zone service, headed up by green fleet specialist, Mark Gallagher. “Our 0Zone service is designed to guide companies through a process of becoming greener,” explains Mark. “Through 0Zone, we can provide an assessment of a fleet’s environmental impact and define a clear pathway to convert the fleet, over time, towards ultra low emission and electric vehicles. “It’s not just a case of choosing which low emission vehicles are going to sit on the company car choice lists, there are financial, operational and human resource considerations to take into account, all of which will affect companies in different ways – which is why we offer a tailored plan rather than a ‘one solution fits all’ approach. “As well as providing fleet consultancy, green fleet reviews, ultra low emission vehicle reviews and grey fleet reviews, we also assist with budgeting advice, forecasts and the financial implications of choosing EVs and ULEVs,” continued Mark. “It can be a big cultural change to encourage drivers, who have always driven a diesel or petrol, into a new era of company vehicle with many still nervous to commit. “Recognising this, we work closely with companies to plan ahead and pave the way for a smooth transition over a timescale that’s right for them.” Grosvenor Leasing is the chosen contract hire and fleet management provider for many of the best-known companies in the UK. Established more than 35 years ago, the company prides itself on providing national solutions delivered with a personal touch. Working closely with fleet managers and drivers, Grosvenor has the financial muscle, national infrastructure, account management teams and outstanding online fleet management systems to support some of the largest vehicle fleets in the country through to smaller, local businesses with cars and vans.
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Last year, Grosvenor Leasing announced that it had reduced the CO2 emissions across its vehicle fleet by 25 per cent in 8 years. With vehicles averaging 108 g/km it placed the contract hire and fleet management specialist ahead of the national average of 120.1 g/km, based on SMMT figures. Going green the easi way Companies running vehicle fleets can be helped with the move towards ultra low emission (ULEV) and electric vehicles (EV), thanks to a combination of initiatives from leading contract hire and fleet management provider, Grosvenor Leasing. 0Zone is Grosvenor’s forward-thinking solution to help companies convert to a greener fleet, bringing significant financial benefits as well as environmental ones too. easi-Fleet Management is a service that makes it simpler than ever for businesses to hand over the operation of their vehicles to Grosvenor Leasing’s team of experts, offering extensive cost and time savings – all for a fixed monthly fee. Bringing them together makes it easier than ever for companies to move to a greener fleet as part of a carefully managed plan, which is why Grosvenor is offering these two exclusive services as one. “The financial argument for going green is now stronger than ever,” said Mark Gallagher, Grosvenor Leasing’s green fleet specialist.
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“Taxation is driving the green agenda, and those companies and individuals who do not adopt ultra low emission or electric vehicles won’t simply miss out on potentially lucrative savings, they will feel a significant squeeze on their finances in the coming years as the cost of ‘not’ changing becomes very punitive. “Yet many companies, particularly with smaller fleets, don’t have time to think about an ‘eco-plan’ because they already have so much on their “plate” running their businesses and dealing with the constant hassles of their current vehicles. “That’s where we can help, because with easi-Fleet Management all suppliers, driver queries, garage bills, expense claims, rental vehicles, fuel cards, accidents, speeding fines, tax renewals, MOTs, and driving license checks are managed by us for a fixed monthly fee. “By bringing 0Zone and easi-Fleet Management together, we will also develop a low emission vehicle policy for you, and manage the change process, so that you can enjoy the financial benefits of becoming greener without the stress.” FURTHER INFORMATION To discuss any aspects of your vehicle fleet, please contact Mark Gallagher www.grosvenor-leasing.co.uk 01536 536 536 Mark Gallagher, Grosvenor Leasing
A different way to look at challenges The pace of fleet industry change is unprecedented and that presents fleet decision-makers with challenges. But too many people in the industry view the numerous issues raised as threats where as I view them as opportunities. Arguably the three biggest challenges facing fleet decision-makers are the introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP); government policy around diesel and the national media’s ill-founded ‘demonisation’ of the fuel; and a lack of clarity about company car benefit-in-kind taxation post-April 2020. To that list can also be added government pressure to introduce plug-in and ultra-low emission vehicles to company car choice lists, and the anticipated widespread introduction of Clean Air Zones in towns and cities nationwide starting in April 2019 with the Ultra-Low Emission Zone in central London. There are other issues – Brexit, the General Data Protection Regulation (GDPR), and the growth of the ‘connected car’ and ‘big data’. What’s more, for fleets that contract hire, there are the lease accounting standard changes that are effective from 1 January 2019. But to return to the three ‘big’ challenges as I see them. Opportunities, not challenges Too often businesses view challenges as the time to retain the status quo and, in short, do nothing preferring to wait to see ‘what happens’. However, as a businessman of some 50 years standing and having been involved in the fleet industry for more than 30 years, every challenge – often seen as a threat – presents an opportunity. In the case of the three ‘big’ challenges the focus should be on reviewing company car choice lists and ensuring they deliver on all fronts including: business need, fitness-for-purpose, total cost of ownership and driver satisfaction. The big problem for many businesses is that, unfortunately, as FIAG has said previously, too many organisations no longer employ a full-time, professional and experienced fleet manager with the knowledge and confidence to make decisions and present their case to company directors. Instead, those professionals with many years of experience have been made redundant or not replaced on retirement and businesses have taken the decision to outsource the fleet
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operation to third parties that, while promising service and bespoke solutions, almost certainly also have other stakeholders to satisfy. Base decisions on fact The ‘wait and see what happens’ approach will invariably cost businesses money: Extending fleet replacement cycles is just one ‘solution’ that has been promoted amid the challenges faced. But that adds costs to fleet budgets particularly maintenance bills and additional rental charges for fleets that lease; and can breed driver dissatisfaction. Similarly, what’s the problem with today’s Euro 6 emission diesel cars that produce more power and torque with lower CO2 rates when compared with traditional petrol-based engines? What’s more, local authorities believe their adoption can help improve air quality as they meet the free entry criteria of the Ultra‑Low Emission Zone in London and the draft criteria for other Clean Air Zones nationwide. The point is that fleets should not follow the popular vote – the national newspaper headlines or comments from those in the industry that have an ulterior motive – they should make decisions based on the facts and total cost of ownership data. Today’s sophisticated hi-tech diesel cars continue to make good sense for many business and company car drivers. What’s more those fleet managers brave enough to make that decision and buy new diesel cars may well be receiving a pat on their back from their finance director in three or four-years when they are sold – and
WLTP WLTP is undoubtedly a huge challenge, but early indications are that manufacturers introducing new models to market have been able to overcome the challenge posed. The all-new Ford Focus – Britain’s best-selling car – is a good example. The manufacturer has been able to deliver “fuel efficiency and CO2 emission improvements of 10 per cent across the range” making the figures little different from those of the outgoing model. Ford has been able to harness innovative technologies, new aerodynamic features and weight-reducing techniques to limit CO2 emission rises and fuel economy reductions as a result of the introduction of WLTP. However, where manufacturers have been forced to homologate existing models to WLTP protocols, a rise in MPG and CO2 emissions – and thus the tax burden – is the result. So the message is review choice lists and introduce wholly new models if possible. Legislators in the UK and worldwide and manufacturers are all working towards reducing vehicle emission – fleet decision‑makers may not know exactly the shape of company car benefit‑in‑kind tax beyond April 2020, but it is a good bet that the lower the CO2 emissions of a car, the lower the tax. To standstill is to effectively go backwards. Yes, there are challenges aplenty, but grasp the opportunity and shape fleets for the future. It will pay dividends. L
Written by Geoffrey Bray, chairman, Fleet Industry Advisory Group
While there is plenty of change occurring in the fleet industry, it should be seen as an opportunity to shape fleets for the future, writes Geoffrey Bray from the Fleet Industry Advisory Group
those fleets that lease may ask their supplier for a share of the potential cash windfall. Evidence from vehicle auction watchers suggests that good quality diesel cars continue to be a desirable second-hand investment with no move away anticipated. As a result, if the slump in new diesel car sales continues there may well be a shortage of models entering the used market in 2021/22 and beyond – thus attracting a residual value windfall. Simultaneously, a market flooded with ‘hard to sell’ petrol cars is likely to see values nosedive.
Leasing & Rental
In association with
FURTHER INFORMATION www.fiag.co.uk
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Has there ever been a more persuasive argument for leasing or long‑term rental than now, given the economic uncertainty and the question mark over the future of diesel? We ask our panelists for their views The fleet industry is in a state of change. The question mark over the future of diesel, the push towards zero and ultra-low emission vehicles, tax changes, clean air zones, Brexit, new mobility trends and big data could all effect the way that fleets operate in the future. This poses a challenge to fleets, with many uncertain about what vehicles to purchase now and how they’ll fit in the future fleet landscape. With this in mind, the argument for leasing or long term rental of vehicles has become more compelling. “In today’s uncertain economic climate, the possibility to have fixed cost motoring for three to four years and avoid the risk of owning a vehicle that may be subject to future environmental or technological scrutiny makes leasing all the more appealing,” comments Rob Mills from Daimler Fleet Management. Mark Gallagher from Grosvenor Leasing says that the cost of running a vehicle is very likely to go up for various reasons, including to potential increases to vehicle pricing as import costs rise post-Brexit, reductions in manufacturer discounts and rebates as they’re likely to channel their support into EU members, rising interest rates, unstable residual values and increases in the price of imported parts. “These all points towards leasing rates going up in the coming year, and vehicle ownership becoming riskier than ever,” Mark says. There is a lot for fleet decision-makers to digest, and this could be a particular problem if fleet is only part of their job, believes Chris Chandler from Lex Autolease. He says: “This is where working with a leasing partner delivers real value, because we bring a depth of knowledge around vehicle technology, the tax and regulatory environment, alongside insight into how these changes affect fleet decisions. We can provide flexibility with contracts to make sure the impacts of these changes are modelled out over the contract-cycle of the fleet, providing more certainty over costs and ensuring the vehicle policy is future-fit.” Alternative fuels The government is investing significantly into improving the charging infrastructure for
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Robert Mills, fleet sales operations manager, Daimler Fleet Management Robert has over 30 years’ industry experience, with the last 20 being with Daimler in various management roles across both the Daimler Fleet Management and CharterWay (van and truck) divisions. He currently heads up the sales operations function covering pricing and risk management, plus consultative support to sales management. Mark Gallagher, green fleet specialist, Grosvenor Leasing Mark has over 15 years’ industry experience and has worked with a variety of corporate and public sector fleets. He has been with Grosvenor Leasing for five years and provides strategic account management and operational fleet reviews, recommending suitable policy, vehicle choice lists and customer support aimed at delivering financial savings for clients. Chris Chandler, principal consultant at Lex Autolease A fleet management consultant for 20 years, pushing the agenda for cleaner vehicles has been at the heart of Chris’ time in the industry. At Lex Autolease, Chris set up the plug-in vehicle proposition which saw the Lex Autolease plug-in fleet increase to over 6,000 vehicles, and the introduction of a hydrogen fuel cell vehicle. electric vehicles. The proposed Automated and Electric Vehicles Bill aims to increase the amount of charge points for electric cars, as well as making them easier to use. The Bill will also give the government powers to make it compulsory for charge points to be installed across the country. Indeed, sales figures show that people are coming round to the idea of an electric or hybrid vehicle. At the start of the year, Go Ultra Low reported that electric and plug-in hybrid vehicles achieved record-breaking levels of popularity in 2017. Registrations increased by more than 27 per cent on the previous year. Hydrogen too has had a funding boost, with £20 million being invested to make it cheaper to make and more competitive to buy, while biofuels has
DEDICATED TO PROMOTING A CLEANER ENVIRONMENT | www.greenfleet.net
had the Renewable Transport Fuel Obligation (RTFO) target doubled. Rob Mills from Daimler believes that the reservations surrounding alternative fuels are slowly changing as the technology and infrastructure continue to improve. He says: “Electric vehicles are constantly improving and with each technological enhancement they are increasing their range capabilities and reducing their charge times. Electric vehicles are now regularly able to travel 250 miles on a single charge which is far in excess of what the average company car driver drives in a typical day which makes them much more accessible for a greater number of people. “Quite often we find that customers aren’t in receipt of all of the facts and as such cannot make a fully informed business decision,
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Expert Panel: Leasing
EXPERT PANEL LEASING
Go Ultra Low
fl ed to b pressur ely-fuelled tiv alterna ehicles v
green ones. As their contract hire and fleet management provider we need to be sensitive to that, but also help them move towards lowering their emissions at the same time.” Mark continues: “We take a pragmatic approach by breaking their fleet down to see which groups of drivers would suit an alternative fuelled vehicle, knowing that its currently an option for some but not all.” It is important to analyse fleet and vehicle usage to understand which vehicles could be switched to EV or AFVs, echoes Rob Mills. He says: “A fleet audit looking at the ergonomic routines of your total fleet may well reveal that diesel vehicles are still the most suitable. Fleet operators should liaise with their lease providers for support and advice on the potential to run AFVs in their fleet.” Rob also urges fleet to look beyond fuel type and consider contract length, mileage requirements, how likely the selected vehicles are to be superseded in the future by a more technologically advanced model, and then work out the best vehicles for their fleet based around a TCO lease programme. Chris Chandler adds: “There will always be vehicle applications that are ideally suited to alternative fuels – shorter mileage, urban driving for example. But it’s important to E
Expert Panel: Leasing
the most from alternative fuels, particularly or conversely become overwhelmed by plug-in hybrids, the correct driver behaviour speculation and hearsay rather than the facts.” is essential and vehicle leasing providers Mark Gallagher from Grosvenor says have a role to play in helping organisations that while drivers are asking more about educate on best practice. Better driver alternative fuel vehicles than ever before, education, alongside increasing choice they are not necessarily choosing them, and improved charging infrastructure, will perhaps due to nervousness about the help to increase the rate of adoption.” unknown. He says: “It’s true that reservations regarding alternative fuels are changing, Fit for purpose but drivers remain concerned regarding With all the negativity surrounding the distances they can cover in an electric diesel, fleets could feel pressured to buy vehicle and that’s causing some to choose alternatively-fuelled vehicles. But ultimately, a petrol or diesel, with many commenting vehicles must be fit for purpose. that they expect this will be their last.” “It’s important not to make a blanket Chris Chandler believes that educating decision for your fleet on an ‘EV verses diesel’ drivers on the options of alternatively-fuelled scenario,” warns Rob Mills. “You should be vehicles, as well as how to get the most evaluating your choices with a leasing partner from EV or hybrids through driving style, is based on your fleet objectives, your usage important. He says: “We have long supported and your needs. The value of financial greater adoption of alternative modelling software is vital in fuelled vehicles and own and this process as the full costs manage the largest ultra‑low are visible and accurate emission vehicle fleet h t i W comparisons can be made.” in the UK. As a result, e h all t Mark Gallagher adds: we have a depth y “Most companies of insight when it egativitdiesel, n and drivers will make comes to usage and ding commercial and financial driver behaviour. We surroun could feel s decisions, rather than know that to get t e e uy
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Expert Panel: Leasing
Final thoughts Rob Mills The remainder of 2018 will bring no further social and economic clarity or stability and will be dominated by the final Brexit proposals and the implementation of WLTP. Relationships between the fleet manager and their lease providers will be more important than ever to help guide them through this uncertain period. Fleet managers should seek to adopt an open view on the future and to consider all options to ensure that they meet their operational and cost objectives. The time for the blanket vehicle policy for all drivers will pass and the mantra of the right vehicle for the right job will be paramount.
WLTP is ‘a challenge’, with many manufacturers ceasing to accept orders on selected models while the testing procedure is being completed
There is a lot for fleet decision makers to digest, and this could be a particular problem if fleet is only part of their job description remember that while electric ranges are still developing and improving, the very latest diesel vehicles can be the most practical option for many businesses, especially for high mileage users and LCV fleets. Our advice is always focused around the operational needs and application of the fleet. It’s about getting the right vehicle for the right job.” The future The pace of change in the fleet industry is unprecedented. So what more can we expect for the remainder of the year? Rob Mills said: “The remainder of 2018 will bring no further social & economic clarity or stability and will be dominated by the final Brexit proposals and the implementation of WLTP. We are already
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seeing manufacturers ceasing to accept orders on certain models whilst they complete their WLTP testing and this will impact driver choice for the remainder of the year.” Mark agrees that the WLTP is a challenge, saying “we’re in for a bumpy ride until that’s ironed out and we’re beyond it.” Grosvenor Leasing recently asked its customers what their main concerns were, and mark describes their answers as “interesting”. “Forthcoming changes to taxation, emissions testing and how that would affect them, plus the potential impact of rising interest rates were the main causes of concern. The affect of GDPR was next on the list, with the green agenda and health and safety also on people’s minds. Surprisingly, Brexit was lowest on this list of concerns,” Mark says. L
DEDICATED TO PROMOTING A CLEANER ENVIRONMENT | www.greenfleet.net
Mark Gallagher Regarding the impact of recent challenges on forecasted residual values, it’s our job to predict what consumers will pay for vehicles on the used car market in three to four years time. The toughest challenge is anticipating what today’s alternative fuelled vehicles will be worth in 2021 or 2022, because its such new territory. That’s why, if I was a company looking to add these vehicles to my fleet, I would opt for contract hire. After all, why take that risk if you can pass it to your leasing provider. Chris Chandler In a landscape where we are seeing rapid taxation, environmental and technological change, leasing and long-term rental can offer decision‑makers the flexibility to adapt to a sometimes unpredictable mobility environment. There is a lot for fleet decision‑makers to digest, particularly when fleet is often only part of their job – for HR or finance managers for example. This is where working with a leasing partner delivers real value, because we bring a depth of knowledge around vehicle technology, the tax and regulatory environment, alongside insight into how these changes affect fleet decisions.
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WLTP: what you should know and what to do about it Hot on the heels of Brexit and GDPR comes a new challenge to the fleet manager – the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) The Worldwide Harmonised Light Vehicle Test Procedure (WLTP) is yet another complication to factor into your fleet planning over the coming years. It may feel like there has never been more noise or uncertainty in the market place, but help is at hand. There are ways we can help you negotiate the coming of WLTP and even turn it to your advantage. But more of that later, first a quick refresher.
align emissions to individual vehicles more accurately. More specifically, it will include a wider range of driving situations (urban, suburban, main road, motorway); longer test distances and higher average and maximum speeds and drive power. It will also include more dynamic and representative accelerations and decelerations and shorter stops.
What exactly is WLTP? WLTP is the new vehicle testing cycle that aims to improve the accuracy of vehicle emissions and fuel consumption figures provided by manufacturers. It replaces the outgoing NEDC (New European Driving Cycle) which has been in force since the nineties and no longer accurately reflects modern vehicle emissions or driving. So far, so simple. But what precisely are the differences between the old system and the new? Firstly, the testing time increases to 30 minutes with four driving phases instead of two. Speed, gear changes and distance travelled are all increased, whilst CO2 figures are tested at lower temperatures to give a more realistic picture of a vehicle’s emissions cycle. Secondly, the new WLTP testing will replicate real world driving and
What does WLTP mean for you? The main thing to bear in mind is that, under the new procedures, vehicles will receive new CO2 figures that may alter their vehicle taxation. Initial testing shows that CO2 and MPG impacts vary, with some car models having a lower CO2 under WLTP and some seeing CO2 and MPG increases. You should start to factor in the new figures when formulating your policy and vehicle choice lists, with some vehicles needing to be removed, and previously out of scope alternatives becoming potential options in the future. You may also find there are times when vehicle ranges and individual engines are temporarily unavailable to order while production is suspended to allow new WLTP testing to be completed. What’s happening when? Changes are already underway. Manufacturers are now testing their model ranges and
will complete this by September 2018. Some have already changed to the new testing regime and published the impact on their model ranges, others are yet to complete or publish their figures. The result of this is more confusion in the market place and a situation where fleet managers may struggle to make like for like comparisons from model to model. In an effort to limit this pain, all passenger cars, will have CO2 values derived from WLTP and NEDC 2 (sometimes referred to as NEDC correlated) from 1st September 2018. NEDC2 is calculated by taking the WLTP test result and applying an adjustment factor which realigns the CO2 to an NEDC equivalent value, with WLTP figures provided for MPG. For LCVs, the implementation of WLTP runs one year later. WLTP testing will be in place for all new vehicles on 1st September 2019. We’re here to help For the fleet manager already dealing with a mountain of new legislation and regulation, WLTP might seem like one headache too many. In fact many fleet managers are electing to weather out the storm and wait for the dust to settle. But why run the risk of increasing your overheads and watching your fleet age. What you need is a fleet partner with the experience and know-how to assess the impact and sort through the detail. At times of change, having the right leasing partner is more important than ever. Leasing offers real advantages to your business because you will be trading in vehicles every couple of years and can therefore benefit from the latest and most efficient technology without worrying about changing environmental restraints. As part of the Daimler family Daimler Fleet Management has close connections to manufacturer innovations, and with the recent acquisition of Athlon across Europe we can offer you a wealth of knowledge and experience. DFM can help you undertake a review of your current fleet and highlight how WLTP will impact you. Through Whole Life Costs analysis, we can help you put a plan in place that will maximise performance and cost‑efficiency, selecting vehicles fit for purpose and future proofed. L FURTHER INFORMATION Visit daimlersixty.co.uk/WLTP or request a visit from us for more on WLTP Email: dfm-uk@daimler.com Tel: 01908 697442
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Have you presented your plans to go green yet? If, like many fleet managers, you’re under growing pressure to present a strategy for lowering your vehicle emissions, expert help is at hand. Grosvenor Leasing’s 0Zone service offers advice and guidance to companies with cars and light commercial vehicles that are looking at ultra low emission and electric vehicles. Our 0Zone service includes: Support in reaching mely decisions about when your green strategy should begin Budgeeng advice, forecasts and help with the financial implicaaons of choosing EVs and ULEVs The development of a low emission vehicle policy Advice on the steps required to move smoothly towards Electric Vehicles (EVs) and Ultra Low Emission Vehicles (ULEVs) Assistance with plug-in and hybrid demonstraaon vehicles (subject to availability) Help with the cultural cultu change involved in encouraging drivers into a new era of company vehicle Grey fleet reviews Green fleet reviews
For more informaaon, or an informal chat, why not call Mark Gallagher, Grosvenor Leasing’s green fleet specialist on 01536 536 536 Grosvenor Contracts Leasing Ltd, Balmoral House, Keeering Venture Park, Keeering NN15 6XU