Fleet News

Nine things you need to know about corporate car sharing

A growing number of companies offer car club-style rental services that allow fleets to hire vehicles for an hour or less. How do they work and what issues do fleets need to consider? John Maslen finds out

The shape of the fleet market is predicted to change significantly in the coming years as companies are expected to move away from car ownership to a pay-on-use model.

Most car fleets already lease their vehicles for a set period and mileage instead of owning them. There is also growing interest in leasing among van fleets.

The next logical step is to pay for vehicles only when they are being used and share them among employees, rather than allocate a car to each driver.

Schemes give fleets access to ‘on-demand mobility’ through a pool of vehicles that are on-site or near their offices, which can be for their own exclusive use or shared with other businesses.

Drivers reserve vehicles in the same way they might book a meeting room. Slots can range from less than an hour to a full day.

Cars are connected to a booking system through the ‘cloud’ so drivers can only access their vehicles at the allotted time, typically using a personalised smart card. The keys are kept inside the car and at the end of a hire, drivers swipe their card to end the hire and lock the vehicle.

Industry analysts predict over the long-term the development of mobility services including car clubs has the potential to disrupt the fleet market in the same way that Uber has revolutionised the taxi industry.

Last year, Frost and Sullivan reported that half the companies it spoke to were already piloting or deploying mobility solutions, particularly around areas such as corporate car sharing

Here we outline the nine things you need to know about corporate car sharing.

1 There is a lot of choice available

Although the market is in its infancy, there is already a range of companies offering a variety of services.

It is important to understand their offerings so a fleet can identify whether the services suit its needs.

In the UK, the most common service is return to base car-sharing, where cars are taken from a specific location such as a dedicated parking bay or place of work and returned at the end of the hire.

Rental companies offering services include Avis, which owns Zipcar; Enterprise Rent-A-Car, which acquired City Car Club and rebranded it Enterprise Car Club; Europcar, which has a stake in two services, E-car Club and Ubeeqo; and Hertz which also offers a car club service.

Leasing companies and manufacturers have recognised the potential for growth in the market, among them leasing firm Alphabet, which offers the AlphaCity car-sharing service whose members covered more than one million shared miles in the UK last year.

Manufacturers also offer services including DriveNow from BMW and Car2go from Mercedes-Benz, which between them have millions of members globally, although Car2go pulled out of the UK in 2014.

Adrian Bewley, director of business rental at Enterprise Rent-A-Car, says: “Car clubs aren’t niche at all. They’re just another form of rental on demand. They’re an integral part of business mobility and are here to stay.”

2 Car clubs can cut fleet costs

Fleet costs can be substantially reduced by introducing a corporate car club.

Companies can reduce the number of vehicles that they own or lease and employee mileage may also reduce, particularly if staff aren’t being reimbursed for using their own cars.

Scheme costs vary dependent on the supplier, but there is little upfront spending required as billing focuses on usage.

For example, Zipcar charges a nominal £10 per employee registration fee at the time at which the employee has a licence check.  Rental costs start at £5.70 per hour and drivers get 60 free miles per day and then pay 25p per mile thereafter.

Alternatively, companies can opt to rent by the day. The fee paid can typically include the London congestion charge, insurance, fuel and maintenance. A fuel card is supplied should the car require filling.

Fabrice Genty, senior director of car sharing at Hertz Europe, says: “With a typically high number of users per car, clubs can be characterised by a higher utilisation rate and a more rational usage of the vehicle.”

Aylesbury Vale District Council has been operating a car club for several years as an alternative to pool cars and some fleet vehicles.

Alan Asbury, senior energy and fleet consultant at Incgen, a wholly-owned trading arm of Aylesbury Vale District Council, which operates an eight-vehicle corporate car-sharing scheme, says: “We were spending £220,000 a year on vehicles, but this has been reduced by £104,000 a year through the scheme.”

3 Car clubs can play a role in most fleets

A car club can provide savings to fleets in every industry sector.

Henrik Jensen, managing director of Ubeeqo, says: “There aren’t really any specific companies which use car clubs more than others. It all depends on the company’s travel needs. We have companies doing a couple of business meeting journeys a month using our car club, but there are also companies with multiple daily journeys which will use car clubs.”

He argues that even a business with limited travel needs can introduce a scheme, with typical business journeys including meetings, commuting between sites and travel to and from airports.

4 Research and testing is important for success

Before a manager introduces a car-sharing scheme, it is important they have analysed their fleet requirements in detail.

This provides a benchmark to establish the success criteria for any scheme. It also identifies which particular areas of the business would benefit from its introduction, including how many vehicles might be needed.

Adrian Bewley, director of business rental at Enterprise Rent-A-Car, says: “Businesses need to plan their mobility requirements based on employee travel habits. Car clubs are part of the solution, but will only meet the goals of the business if they solve a real travel need.”

Companies need to consider how and where their employees travel but also why they are opting to take the car and whether alternatives ranging from public transport to a conference call would be better.

Testing can lead to the introduction of other initiatives. For example, Liftshare provides a web-based platform enabling employees to share their commute and cut costs. It’s being used by organisations ranging from Diageo to Jaguar Land Rover and National Grid.

Suppliers are keen to work with potential customers to establish their needs, but there are also organisations that are dedicated to supporting the development of car sharing, such as Carplus.

Fabrice Genty, senior director of car sharing, Hertz Europe, says: “Sometimes a good way for companies to get a clear picture on how a car pool can best operate is launching a small pilot.

“Following an initial assessment of the needs, a car club of even one or two vehicles could be a smart first approach to the programme. The number of cars can then be gradually increased as more employees embrace the scheme.”

5 Car clubs provide valuable fleet insight

One of the additional benefits for introducing a car club is the insight it provides into employee transport needs.

Cars are equipped with sophisticated telematics systems to arrange bookings, unlock the car for the relevant user and also track the vehicle while it is being used to enable accurate billing.

This gives a fleet manager access to a wealth of vehicle usage data that otherwise may not be available for standard fleets, particularly on cars where drivers may resist the introduction of telematics as a specific initiative.

Clive Forsythe, corporate sales director at Europcar, says: “On-board electronics can deliver accurate real-time data on vehicle usage. With this insight, improved cost control can be achieved by reducing fuel consumption and managing maintenance.

“Comprehensive management information and live reporting information provides accurate insight to update travel policies as necessary.”

6 Car clubs can help to reduce emissions

Car clubs are an efficient way to introduce electric vehicles (EVs)to the company fleet.

According to E-Car Club, which specialises in EVs and runs 120 throughout the country, the average B2B journey is around 30 miles, which means range is not typically an issue. However, education is often required to promote confidence in the technology, says Patrick Cresswell, head of marketing.

Live charge data ensures that when drivers come to book a vehicle, they can state their required range so that the most suitable car is booked.

Cresswell adds: “It’s really important to gather and analyse existing journey data from prospective clients. This information allows you to look at the journey dynamics to ascertain if the shared, electric option is going to meet the carbon and financial savings both parties hope to achieve.”

For electric vehicle car clubs, there is the added requirement for drivers to remember to plug-in vehicles when they finish their hire period. E-Car Club monitors vehicles to see if they are on charge once a hire is completed, allowing it to respond if any drivers forget.

Even without zero-emission vehicles, car clubs can have an environmental impact as drivers reconsider their journey options.

Croydon Council saw business mileage drop from 1.1 million miles a year to 642,000 (48%) after shifting from grey fleet to a car club. Car travel costs fell 64% to £472,000 and CO2 emissions fell more than a third.

7 Car clubs can reduce grey fleet use

Car clubs can be a viable alternative to drivers using their own cars for business journeys.

Fleets benefit from lower spending, because instead of the administrative costs of processing and paying employees’ mileage claims, which in some cases may be overstated, companies pay the supplier based on vehicle use that has been electronically tracked and verified using telematics.

Richard Falconer, managing director of Co-wheels car club, says: “Instead of paper-based systems, logbooks and dozens of small claims of different amounts, it can all be dealt with online with one measurable bill.”

Aylesbury Vale District Council encouraged grey fleet drivers to switch to its Enterprise Car Club fleet by cutting grey fleet reimbursement rates.

Car club utilisation is now at 80%.

Nottingham Trent University has also introduced a scheme. David Hobday, sustainable transport officer, says: “We have been able to reduce our reliance on people using their own cars for work trips and claiming reimbursement.

“Using a car club encourages employees to think differently about business travel.”

8 Drivers will still need to be managed

A car club can relieve a business of a substantial amount of administration compared to traditional solutions such as company cars or grey fleet.

However, managers will still need to closely monitor how vehicles are used, particularly in the early days of any scheme.

Problems can occur because booking cars is very easy, so initially employers may find that drivers are reserving vehicles   and not using them or booking time slots that are too long.

Alan Asbury, from Aylesbury Vale District Council, says: “One of our key learnings is managing cancellations. In the early days, staff would overbook cars to be on the safe side, but if they arrived back early, they wouldn’t cancel their booking. As a result, vehicles were left in the car park, which led to questions from other staff who were unable to book a car, despite vehicles looking to be available.”

Vehicle condition will also need to be closely monitored to ensure problems during one hire aren’t left for the next user.

9 Companies can share car club costs and generate revenues

Car sharing isn’t just limited to company employees. Although a business can opt for a stand-alone car club service, there is also the option of joining forces with other companies to establish a larger, more flexible programme.

This can involve vehicles being parked in on-street bays, which frees up space in the company car park.

This concept can be developed further, with vehicles made available to staff or the public outside working hours to generate revenue that reduces the overall cost of the club.

There are security issues to consider,  as vehicles may be left on the street overnight, but it can be a workable solution.

Co-wheels managing director Richard Falconer says: “Many of our public sector clients, such as councils, have led the way on this as they wanted to encourage car sharing for residents to make sustainable transport affordable to local people. It depends on location as those close to housing or flats have stronger demand. It is also a benefit for staff as well, as they have access to car club membership for evening and weekend hire which is billed privately. This is a major consideration in some areas such as London where running a car is expensive.”

Croydon Council’s scheme provides exclusive use of 25 vehicles to employees during working hours, but the fleet is then made available to more than 2,400 Zipcar members in the borough during evenings and weekends. 

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