Whichever category one considers, it is important that the fleet manager has it clear in their mind what is meant by pricing - and today, how those prices compare between countries, and, as important, how might they realistically expect to benefit if at all, from those market differences.
In this article, we will examine the different new car price levels within the EU, the different levels of pricing which might be considered and seek to pull out some pointers as to how pan-European fleet operators might seek to manage those differences.
What is a new fleet car price?
There is quite a range of different prices that might be considered when looking at vehicle prices in Europe, indeed within a single market, and it is critical that we are all singing from the same songsheet when trying to make comparisons and strategic decisions. Consider the following range of different prices, any of which might be quoted to the international fleet executive:
Inter-market and inter-vehicle pricing can be further complicated by currency fluctuations and short-term deals. Suffice to say, the range of opportunities to make mischief by comparing different levels of pricing is enormous. An index comparison
To try to bring some sanity into this complex situation, one might look at the euroPrice indicators produced by Jato Dynamics; here the company has undertaken an analysis of a basket of cars' prices across the EC - in this case some 1,100 variants in the markets which between them account for some 80% of new car sales in Europe, so it is comprehensive.
The build-up to the car price is shown in the three charts on this page. Consider the contents and their strategic implications.
Base prices are worked from an index of 100 at the beginning of 1999. It will be noted that base prices vary between the low figures of Greece and Portugal to the high figures of the United Kingdom and Germany - yet the two latter are some of the biggest car markets in Europe. Some of the markets which appeared high in terms of base price have, in reality, a lower tax figure. Thus Germany and the United Kingdom would appear to be among the lower tax-rated figures.
Attention to the fine detail is necessary when an organisation seeks to plan a pan-European fleet strategy. The temptation must be to look at the different markets and ask the question: 'Why can't I buy in one market and use in a second?' In theory, the answer might be 'no problem' in reality, however, it should be 'proceed with extreme caution'.
Cross-border leasing is possible; there are companies claiming to be willing and able to do it. So what are the practical pitfalls of purchasing a vehicle in one country, operating it in a second, and even selling it in a third?
Within the EU, after all, we claim there is free movement of goods and services, and in the majority of those markets there is a single currency, so there should not be, at least in theory, any issues of currency exposure. Some pragmatic approaches to the cross-border issue
International fleet operators have a number of options which they might pursue regarding cross-border operations in an attempt to seek lower overall costs of vehicle provision.
Efforts to seek to take advantage of lower prices across borders can take a variety of approaches; some of which might work; others of which are, frankly, dubious, and still others which are probably illegal.
However, there are a number of points which the pan-European fleet should bear in mind when it considers the opportunity of operating across the border in attempting to cut costs. Consider the following - and this list is by no means exhaustive.
The administrative task of acquiring cars out of market can be complex - or at least time-consuming; does that get added to the real price? Quite simply, there are a lot of hidden costs to be taken into account when a business seeks to acquire a car out of market and then operate it. Before you consider just the saving on capital cost which might be possible in acquiring in a different market, look at that range of broader issues and put a monetary and hassle value on them; make sure it is a realistic figure. Some conclusions
Cross-border transactions might seem to be a panacea to high purchase prices; however, there are many smaller issues that need to be taken into account - and jointly they may well destroy the difference between the perceived retail price and the transaction price of those shiny new cars 30km away, but in a different country.