Fleet News

European viewpoint: The challenges of multinational vehicle leasing

'I recently returned from a conference in America. The organisers had kindly invited me to give a speech to a group of executives who manage multinational vehicle fleets. The brief was to take a high-level look at the issues that have affected them, and are likely to affect them, in running their fleets.

The problem with a brief like this, of course, is knowing where to stop, because there are so many things that affect multinationals, and therefore affect their fleets.

Multinational fleet management is still in its infancy. No lessor, multinational or consultant has all the answers. Fleet managers are going where FMCG companies went 35 years ago.

Those managers asked 'Can we sell toothpaste in Thailand?' 'Can we sell disposable razors in Nigeria?'

Today’s fleet managers are asking, 'How can we manage our global fleet?' In truth, multinational fleet management is still work in progress, and fleet managers need to know far more than the fact that their drivers in Austria will be fined if they don’t wear reflective jackets at roadside breakdowns, or the insurance rules that apply if a truck is driven into Turkey.

There are many issues multinationals need to consider: The European Union is making life easier but has a long way to go. There has been some legislative harmonisation, for example, with VAT rules (but not VAT rates), but we still have completely different corporation tax rules – though this may change soon. Eastern Europe has opened up and provided a new market for multinationals, though the leasing and vehicle-servicing infrastructure is not as mature as in Western Europe.

The developing world represents more than 30% of global GDP and offers huge potential for multinationals. Manufacturing will continue to move east - and manufacturers need trucks and cars.

M&A activity in the global vehicle leasing industry has reduced the number of players but they are making real investment in meeting the needs of multinational fleets. Fleet managers are becoming mobility managers, and have to determine the best way to move people or goods from A to B, not just obtaining the right vehicle at the right price. Should we own our trucks or lease them? Should we have company cars or rental cars? How should we control the risks involved in allowing employees to drive their private cars for business?

And this is happening at a time of greater scientific management; fleet managers are expected to deliver timely, comprehensive and accurate information about their fleets, wherever they are located. Gut feel no longer satisfies senior management – they want empirical data.

The relentless march of regulation will continue unabated. (Wouldn’t it be great if legislators around the world decided to take a year off?) Taxation affects every aspect of fleet management, lease accounting is still developing and Basel 2 will make it more expensive for bank-owned lessors.

Insurance regulations, disability laws, corporate social responsibility issues, sex discrimination, employment law, drivers’ hours, road use laws, finance laws, credit laws - fleet managers need to keep abreast of all of these. Fortunately, a number of fleet management companies are now happy to provide advice and have geared up to provide services to multinationals.

Macroeconomic developments are affecting multinationals. The ageing population in the developed world is making it harder for companies and governments to afford pensions and healthcare. We need an increase in efficiency, performance and economic activity to fund these, and this is forcing companies to expand internationally to seek new markets and to drive down costs. Lots to keep a fleet manager busy!

Globalisation is creating polarisation in many markets, with lots of big companies (the winners in globalisation), lots of small companies (offering local service) and a decreasing number of mid-size companies – they are being swallowed up by the big boys. Fleet management companies are striving to match the evolving needs of the big boys.

International fleet managers need to know about local cultural differences. Some car fleet markets are very mature, and drivers expect to choose their own cars. Does this conflict with the need to control costs? Not necessarily. But it does make it hard to set an international fleet policy.

Environmental issues are set to dominate the international fleet management scene.

Environmental reporting will become much more important. Some American pension funds already push companies to disclose CO2 output, and name and shame the poor performers. This puts fleet managers in the front line. When your CEO starts asking about your carbon footprint, will you be ready with the answers?

In truth, a daunting array of issues affects the fleet manager’s work; it is this multi-faceted aspect of vehicle management that has encouraged so many of us to make our careers in this area.'

  • Colin Tourick MSc FCA FCCA MICFM is a consultant specialising in increasing vehicle leasing and fleet management. www.tourick.com
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