Fleet News

Future gazing – what 2005 will bring

AS 2005 dawns, fleets are gearing up for a fresh set of challenges. Impending changes to legislation, greater emphasis on risk management and technological improvements are all issues which are set to dominate the headlines. Here FNN gathers the views of key industry leaders on what they believe to be the highlights and main problems of the coming year.

Funding

Samantha Medley, business development director, Venson
An expected cut in approved mileage allowance payment (AMAP) rates, which could be announced in the March Budget, will have a significant effect on employee car ownership (ECO) schemes and cash-for-car alternatives. Depending on the contracts that companies have signed with their suppliers, they could find both the cost to continue and the cost to withdraw equally expensive.

Companies may continue to buy vehicles outright, but should look to external suppliers to ease the administration workload and ensure duty-of-care compliance.

John Lewis, director general, British Vehicle Rental and Leasing Association (BVRLA)
With the Government reviewing vehicle leasing we will see the disappearance of the capital allowance discrimination for cars costing £12,000 and above, placing leasing on a level playing field with other forms of vehicle funding. A focus on customer service will increasingly turn attention away from the concept that fleet size is of paramount importance.

Keith Allen, managing director, ALD Automotive
Declining diesel residual values, coupled with demand from fleets for contract hire and leasing companies providing robust occupational driving risk management solutions, will be the key issues facing the fleet industry in 2005. In addition, companies operating laissez-faire car allowance schemes will come under increasing pressure to put in place measures to ensure road safety and duty-of-care regulations are met.

Simon Oliphant, managing director, Hitachi Capital Vehicle Solutions
Increasing focus and awareness on duty-of-care and health and safety for employers, coupled with the Inland Revenue looking at tax-free mileage rates on own car use for business will lead to more people moving back to company cars.

Green transport

Richard Tarboton, head of TransportEnergy, Energy Saving Trust (EST)
EST has proposed a new low-carbon programme, which is designed to support Government targets of 10% of new vehicle sales to be within 100g/km of CO2 by 2012. There are plans to build on its provision of advice to the market, a new air quality programme and three technology development programmes that will further the development of clean, low-carbon technologies. Each of these new programmes will need to be approved by the European Commission.

Tom Fidell, director general, LP Gas Association
THERE will be increasing concerns about the impact of diesel vehicles on our air quality, especially in urban areas. The Government has recognised the benefits of liquefied petroleum gas (LPG) and has given a commitment on fuel duty providing three years’ advance notice on any changes. This means that the price at the pumps will continue to be around half the price of petrol and diesel for the foreseeable future.

Legislation

Chris Howell, chairman, DriveTech
The legislative noose around the necks of fleets and businesses that allows staff to drive their own cars for work will continue to tighten with increasing landmark court cases.

David Faithful, partner, Clarke Willmott
The arrival of the Mobile Worker Regulations in March will require fleet managers to accurately record the working time of drivers engaged in transport of goods and passengers. The new regulations go beyond previous regulations governing HGVs and PSVs and will cover ‘white van man’ activities.

Keith Allen, managing director, ALD Automotive
The importance of companies and their directors taking firm leadership of at-work driving risk management issues is crucial with new laws such as the Road Transport (Working Time) Directive in force from March and tougher penalties on the horizon for drivers who use hand-held mobile phones.

Risk management

James Sutherland, managing director, Peak Performance
One of the most important issues in 2005 will continue to be the duty-of- care employers have to employees who drive on company business. Companies need to be seen to do more in this vital area of operation.

Businesses should have a real standard of care towards their employees and should have in place a driving safety management plan to demonstrate they have assessed the risks associated with driving at work and taken actions to minimise them.

Fleets that turn a blind eye to such basic administration have only themselves to blame if they end up facing the severest of consequences.

Andy Price, head of Zurich Risk Services’ Motor Fleet Practice
The coming year will see an increasing focus on the ‘Driving at Work: Managing Work-related Road Safety’ guidelines published by the Health and Safety Executive (HSE) and Department for Transport (DfT) in September 2003.

The Health and Safety at Work (Offences) Bill, currently before Parliament, could have serious consequences for companies. Changes as a result of this, rather than any corporate killing legislation, are likely to result in a director or responsible officer of the company in court, faced with a possible prison sentence.

As the HSE/DfT guidelines start to be given a higher priority by the enforcing authorities we are likely to see some important case law relating to fleet operations in 2005.

Chris Howell, chairman, DriveTech
Company car and van drivers building up penalty points on their driving licences will become an increasing issue as a result of measures outlined in the Government’s Road Safety Bill, likely to reach the statute book this year.

With three penalty points promised for drivers caught using a hand-held mobile phone while on the move and speeding motorists facing up to six penalty points if caught, it is likely that more at-work drivers could find themselves receiving endorsements.

Fuel management

Gordon Balmer, UK country manager, BP European Fleet Services
With the introduction of new security measures – such as PIN-protected fuel cards – fleet operators can look forward to a year of improved protection and peace of mind. The adoption of such technology will also lead to additional opportunities for businesses and provide enhanced control over their vehicles and drivers.

Tom Gillett, manager, Esso Cards
The coming year will see a new format of retail sites targeted to meet the refreshment needs of busy, working customers. Filling stations will offer a wide range of traditional goods, but in addition will have coffee shops and serve sandwiches and freshly baked pastries. There will also be new technology, one benefit of which will be that customers should experience quicker till service.

There will be other initiatives to ensure customers experience great service when they visit sites, such as offering lower-fat sandwiches and ensuring that the toilets are clean.

Remarketing

Rob Barr, marketing and planning director, Manheim Auctions
All the signs are that the used car market will retain its stability into the new year. January always sees an increased number of vehicles coming back off contract, and prices should be strong for 2002 and 2003 plated cars.

As diesel used volumes look set to increase, Manheim does not envisage the huge fall in residuals anticipated by many, but sees the best quality cars continuing to attract strong bids.

Manheim is confident the CV market will remain buoyant in 2005. This market is strongly linked to economic conditions and, as interest and mortgage rates look set to stay relatively low, small businesses will continue to buy used vans.

Roger Woodward, managing director, Cars Direct
There is optimism about the prospects for the fleet market in 2005. However, this optimism is tempered by the general volatility of the market and fleet managers will continue to face challenges in the coming twelve months.

Challenges include disposal routes, pressures on cost and probably the most important, the issue of vehicle paperwork. The year 2005 could be the year of the internet for the fleet industry. The drivers for this will be increasing time pressure and focus on gaining the maximum value for ex-fleet cars, in that respect the only viable answer for the future is the use of the internet.

Graham Smith, general manager, BCA Blackbushe
There are no clear signs that the market in 2005 will behave very differently from last year and strong demand should keep prices firm throughout the first quarter. Typical fleet-sourced stock will be much in demand and diesel is expected to continue to be hot property. But volume vendors of this stock will have to be more vigilant on condition and ensure vehicles presented match the expectations of trade and non trade buyers.

The light commercial sector is on a roll and will keep going well into next year. Economic conditions are favourable with interest rates remaining low and business confidence is generally high. Easter falls in late March and as this period can often be a watershed in demand, there may be a change in buying patterns after the bank holidays.

Rental

John Lewis, director general, BVRLA
The BVRLA sees the use of rental cars escalating as fleets increasingly ban the business use of privately-owned cars for health and safety reasons.

Penny Stoolman, sales and marketing director, Avis
E-business will continue to be a growth area in rental. Avis has already seen significant growth in online bookings which looks set to continue in 2005. Managing costs is also top of the agenda for corporate customers going forward and Avis predicts that more large corporate customers will use restricted car groups.

This is particularly relevant for online or micro site bookers, another growth area. Use of tailored management information reports will also increase to identify potential costs savings.

Flexibility is key here in terms of rental options on offer and how business is transacted.

Industry outlook

Chris Macgowan, chief executive, Society of Motor Manufacturers and Traders
As interest rate rises start to increase, their affect on the private market, fleet and business volumes will continue to bolster new car registrations. We expect a slight fall overall but still to see 2.46 million new cars registered in 2005.

Stewart Whyte, director, Association of Car Fleet Operators (ACFO)
The 2005 Budget should point the way for the benefit in kind tax rates for 2007/8 and, in all probability, a review of the Inland Revenue’s tax-free AMAP rates for employees using their own cars on company business. This could lead to further consideration of the cash-or-car debate. Duty-of-care, health and safety and the overall management of on-road risks should remain high on the priority list of all fleet managers.

A major concern is that many businesses think that outsourcing vehicle acquisition, funding and maintenance totally absolves them of all responsibilities of vehicle management issues.

Outsourcing without careful research and ongoing contract management is likely to prove an expensive mistake.

Philippe Bismut, chief executive officer, Arval
Duty of care legislation will continue to dominate every fleet controller’s agenda in 2005, regardless of whether the Corporate Manslaughter Bill ever sees the light of day.

There will be an increasing administrative burden as the speeding and penalty points system is restructured and more city centres adopt fixed claim penalties for vehicles entering designated bus lanes.

There will be no relief in 2005 from growing regulation introduced over recent years. This is making the effective operation of a company vehicle fleet increasingly complex. Leasing firms must now deliver real added value to their customers by providing proactive consultancy and advice. The winners will be companies that continue to strengthen their customer service programmes and provide customers with comprehensive advice and support.

Technology

George Webb, managing director, RAC Software Solutions
The ever-decreasing cost of telematics solutions will see their wider penetration into the car market from their traditional niche in light and heavy commercials.

The internet and e-commerce initiatives will play an even greater role in fleet managers working ‘smarter’ rather than ‘harder’. Giving more users access to data reduces the burden on busy fleet management departments enabling them to use their time more efficiently.

More business will be transacted on the internet for acquisitions, disposals, work authorisation and enquiries to other service providers.

Andy Leech, sales and marketing director, cfc solutions
Last year saw levels of growth unseen in the fleet management software market for many years.

We believe that 2005 will continue that trend, especially as fleets continue to adopt specialist fleet software as a means to meet their duty-of-care obligations, using the infrastructure it provides to set up an auditable fleet health and safety policy. There will also be an ongoing move towards the use of fleet software in non-traditional fleet arrangements, such as to monitor outsourced fleet arrangements and for the management of employee car ownership (ECO) schemes.

Ken Trinder, business development manager, epyx
We expect manufacturers will make greater use of technology, especially for service-inclusive programmes, and much of this will benefit fleets by providing them with service histories on vehicle where maintenance is paid for by the manufacturer, as very often they are not aware if a vehicle has been serviced.

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