Industry overview

Ivan Hodac, Secretary General European Automobile Manufacturers Association (ACEA)

THE European Union does not have a workable transport policy and is instead flooding the motor industry with huge volumes of often contradictory legislation, the head of Europe’s motor manufacturers association has claimed.

Ivan Hodac, secretary general of the European Automobile Manufacturers Association, made the claim as the keynote speaker during the Fleet News Europe Conference in Brussels.

In addition, Hodac warned, the motor industry is the most regulated after the pharmaceutical industry, with 85 EU Directives affecting the industry and 115 Bills. As a result, the industry is under immense pressure over costs, but buyers don’t relate this to what they actually pay for a car.

Hodac said: ‘We have made a difference in many areas, such as mobility, the environment and safety through voluntary commitments, but few people recognise what we have done.

‘In addition, since 1996, vehicle prices have decreased by 10% while the general price index has gone up by 13%.’ New challenges, he said, included the growing share of the European market taken by Japanese and Korean manufacturers, further legislation and China’s growing economy. He added: ‘2006 is a year of challenges, from emissions, to regulations, biofuels, pedestrian protection, and future technology.’

Thomas Chieux, lead researcher International Car Distribution Programme

The car market – now and in the future

THE importance of the corporate fleet market throughout Europe is much greater than official figures suggest, accounting for more than half of all sales in many markets, experts have revealed.

In the UK, although official figures put retail sales at about 49% of the market, research by the International Car Distribution Programme suggests it is just 23%, with the rest taken by a variety of business sales.

In Germany, the official estimate of 49% of sales being retail drops to 47% under detailed scrutiny of registrations and in France the official dominance of retail falls to 50% at most when looked at in detail, according to Thomas Chieux, lead researcher, International Car Distribution Programme, France.

Chieux also revealed that fleet buyers throughout Europe were putting safety first when it came to purchasing policies.

Research carried out across the continent revealed that when it came to technology, 74% of fleet buyers expected it to improve safety, while 53% preferred benefits relating to comfort, and 40% theft protection.

About one-fifth focused on vehicle tracking and management or navigation support.

The second most important buying area was the ‘utility’ aspect of the vehicle and the third was cost of use.

However, when it came to emissions, views differed significantly depending on the country, with 45% in Italy putting low emissions high on the agenda, while just 27% in Portugal felt the same.

Demand for diesel may have reached a natural peak in Europe according to latest research.

In countries such as Luxembourg and Belgium, the share of diesel sales is more than 70%, while in Italy, Portugal, Austria, Spain and France it is between 58% and 70%, while Germany is 41%, Norway is 36% and the UK 35%.

But Thomas Chieux, lead researcher of the International Car Distribution Programme, suggested that demand for diesel could be slowing, with the overall EU figure rising just 0.2% to 48.5% in 2005, while the diesel share is decreasing in Austria Germany and France.

Chieux added that in future, there were a variety of issues that would affect the European fleet market, including a slight decrease in new car sales, the arrival of new EU members, and the potential fall in diesel’s market share.

Steve McLennan, marketing manager for industry analyst Jato revealed that as demand for diesel had increased, so had the price premium for derv cars.

However, he showed that despite prices varying by thousands of pounds, when specification was taken into account they were much closer in reality throughout Europe.

Prof Peter Cooke, KPMG professor of automotive industries management Nottingham Business School, Nottingham Trent University

Turning safety into services

NO senior employee should be allowed to drive a company car of 2.0-litres and above without a full risk assessment and driver training.

That is the view of Peter Cooke, KPMG professor of automotive industries management at Nottingham Business School, Nottingham Trent University, who believes that adopting best practice when it comes to driver safety is not just an option for companies, but a moral duty.

Although it reduces unnecessary expenditure and can also improve morale, the problem is many firms do not have the internal expertise to launch effective safety policies.

As a result, suppliers can help fleets meet their safety commitments to drivers and improve their bottom line at the same time.

Key areas where suppliers can help is through driver training, vehicle monitoring systems and risk management consultancy.

In each case, a focus on safety not only saves drivers lives, but also ensures that costs are kept to a mini- mum, keeping a company’s bottom line healthy and finances in the black.

Anita de Groot-Hanegraaf, global commodity sourcing manager for fleet, travel & HR, Oce-Technologies

Service and the customer – what European fleets want

FLEET managers must put strong partnerships with suppliers at the heart of their organisations to ensure long-term success of their operations.

Such a partnership is built on honesty, clarity, realistic expectations and the full and enthusiastic support of board members.

Anita de Groot-Hanegraaf, global commodity sourcing manager for fleet, travel and HR at Oce-Technologies, which operates 6,000 cars, said in addition that the key to any successful contract implementation is achieving the identified savings, but the savings had to be realistic from the start.

In-depth research by leasing giant Masterlease backed up her view, with partnership being rated as most important in a survey of hundreds of fleets, closely followed by value for money, responsiveness, helpfulness, personal service and specialist expertise.

Nick Brownrigg, chief executive officer, Masterlease Group, said that despite this, when it came to identifying competitive suppliers, cost was still classed as far more important than any other area.

De Groot-Hanegraaf said fleets had to ensure that trust could be built with suppliers and maintained.

Brownrigg agreed, especially when it came to error management, as being honest and finding solutions for customers could make them more likely to renew contracts than if there had been no problems at all.

He revealed that 88% of customers without problems would purchase services from the same company but, when it came to satisfied complainants, 95% said they would repurchase because they knew their supplier could cope in a crisis.

This compared to 75% for ‘mollified complainants’ and just 35% for dissatisfied complainants.

He added: ‘This shows the importance of suppliers offering value, while service remains key.’

De Groot-Hanegraaf said: ‘There needs to be a clear implementation plan, clear structure of ownership, clear communication plan and clear reporting strategy. ‘Realistic expectations and goals need to be clearly reported to all parties involved and you need to ensure that trust can be built and maintained.’

Bart Vanham, director PricewaterhouseCoopers Europe

Doing business in Europe –operating in a diverse market

taxation can be as effective as closed borders when it comes to thwarting an effective pan-European business.

And with cars one of the most heavily taxed items, fleets need to be looking long term and making plans to deal with the multitude of differing systems.

According to Bart Vanham, director of PricewaterhouseCoopers Belgium: ‘With taxation and cars, love and hate are a thin line. Cars are one of the major sources of income for Governments, but taxation influences a range of areas including vehicle choice, demand for corporate cars, acquisition method and so on. For fleet operators, therefore, to make sense of the long-term vision for the market, you have to understand the short and medium term.’

He pointed to global trends since 1954, when VAT was first born. Now more than 140 countries have adopted a VAT-style taxation system.

The trend is towards increasing indirect taxes – effectively pay-on-use – because direct taxes raise production costs and reduce motivation to work.

Vanham said: ‘The long-term vision is a shift towards a highly increased taxation of consumption, so for cars, taxation will focus more on use than possession.’

Once the tax issues have been resolved, fleets need to ask manufacturers to meet half a dozen main criteria.

Lars-Erik Aaroy, sales director, Toyota Motor Europe, said: ‘Pan-European fleet deals work only if the original equipment manufacturers meet the challenges.

‘For manufacturers, there are six key challenges.

‘An attractive product offering, attractive brand positioning, strong network and services, competitive running costs offering, strong international sales organisation and co-operating national sales organisations.’

Special focus on key industry issues

THREE breakout sessions covered the important areas of remarketing, leasing and fleet management during the conference.

Paul Bradbury, managing director of BCA mainland Europe, explained that fleets faced a series of challenges in the used vehicle market, including a growth in operational leasing volumes and returns, the domination of a large number of buyers and the growing difficulty of exporting used vehicles.

He argued that to achieve success in cross-border programmes, confidence was key, familiarity with the local market was vital and the right tools were needed to achieve the best price available.

During the leasing breakout session, chairman Peter Verkuyl, vice-president of the European Car and Truck Rental Association, introduced a presentation from Marc Peeters, senior manager, information risk management, at KPMG Netherlands.

Peeters focused on the challenges facing leasing firms trying to introduce common IT systems and argued that a number of issues had to be considered.

This included market conditions in each country, fleet size, differences and similarities between countries, asset categories, product range and available budgets and timescales.

In the fleet management breakout session, John Maslen, editor-in-chief of Fleet News Europe, examined the trials and tribulations of running a pan-European fleet and revealed a proposed charter for fleet suppliers, designed to improve services to customers.

He was joined by Anita de Groot-Hanegraaf, global commodity sourcing manager for fleet, travel and HR, at Oce-Technologies, Yvonne Skinner, fleet manager, Symbol Technologies and Kerstin Goeritz, travel/fleet manager for Imperial Tobacco.