Global Fleet Costs

Nick Brownrigg, CEO of Masterlease, says taking control of global fleet costs, both environmental and financial, will be the key issue facing fleets across Europe in 2007

Without a doubt the biggest issue facing international fleet managers over the next year is the global cost of running a fleet – both in financial and environmental terms. The volatile fuel prices seen over the last year have put vehicle running costs firmly under the spotlight, leading companies to scrutinise how much they are spending across the world on both fleet running costs and the vehicles themselves. What they find can be shocking – it would not be unusual for a major corporate to spend between $50 and $200 million dollars a year on keeping the workforce mobile, so clearly even a small percentage cost reduction can save millions.

International fleet managers are coming under increasing pressure to reduce these costs and many of them are looking at sourcing their fleet on a pan-European level to achieve cost savings and consistency. The traditional approach has been to source fleets with different leasing firms in each market across Europe, which could really be a wasted opportunity. Company cars are a sensitive issue and often there is a misconception that a pan-European agreement won’t give employees or fleet managers the local service that they demand. However, there are already very successful pan-European agreements in place which deliver global consistency and cost savings, combined with effective local service that is tailored to the needs of each market.

There has been some confusion about what a pan-European fleet actually is – we’re not talking about standardised pan-European solutions. The best deals get the right balance between cost and benefits by acting globally but thinking locally, ie by using central co-ordination and management but taking into account tax differences, local customer requirements and legislation. It is this type of pan-European agreement where we expect to see significant growth over the next few years.

It is not only fiscal cost that is seeing major global businesses coming under pressure – from a corporate social responsibility point of view, they are being pushed to take action on the environmental impact of their vehicles. Despite breakthroughs in technologically-advanced engines, CO2 levels continue to rise, with transport a major contributor and every employer has a duty to reduce their emissions. However, one criticism that has been levelled at the European Union is that there is little consistency in terms of environmental approach across its member states. Each country has its own emissions targets but surely we would get there much quicker if the whole of Europe worked together.

Until the EU shows signs of unifying environmental taxes, it is up to companies themselves to encourage drivers to be more environmentally-conscious with their choices of vehicles: Taking a pan-European approach can help to give companies far better control over the environmental impact of their vehicles, as well as enabling companies to ‘do the right thing’ by making sure their drivers across the continent are adhering to the same green policies. The possibilities of more incentives being brought in to encourage the uptake of greener vehicles as well as more concerted efforts being made to inform drivers about the impact they have on the environment are particularly strong this year.

Offering incentives will be especially important as the higher prices for ‘greener vehicles,’ such as hybrids and other alternative fuel cars, have been a barrier to their take-up to date, but pan-European agreements offer a real opportunity to get these costs down by volume discounts. However, the availability of alternative fuels varies in each country so this has to be handled carefully.

Unfortunately, it seems the European Union is far from unified on this subject and so it will be left to employers to lead the way. However, the message is clear: being competitive and being socially responsible are not mutually exclusive and taking a pan-European approach to fleet management can have a significant impact on the bottom line.