Fleet News

List of changes - and the pace of them - borders on 'bewildering' - FN50 2017 ACFO view

John Pryor, ACFO

I have been a company car fleet manager for almost 30 years and for more than the past decade my role has also embraced travel management. But, in my experience, the current pace of change we are witnessing is unprecedented.

The changes are numerous and include: 

*          Government-influenced issues around taxation and legislation in respect of vehicle emissions and occupational road risk management compliance, the former also involving local government with the advent of Clean Air Zones (CAZs) and the like. 

*          Government pressure for fleets to embrace plug-in vehicles which can be further expanded to include a review of fuel types operated and whether diesel remains the number one choice. 

*          The impact on fleet vehicle selection of the new Worldwide harmonised Light vehicles Test Procedure (WLTP).

To that list can also be added:

*          The broad remit of cost management and managing employees’ expectations and available benefits. 

*          For fleets that contract hire there are the lease accounting standard changes that are effective from January 1, 2019, to take into account. 

*          The connected car, ‘big data’ and data protection with the May 2018 introduction of the General Data Protection Regulation (GDPR) which promises to be another ‘minefield’ for employers and fleets.

*          The continuing fallout from the 2017 tax changes impacting on both car salary sacrifice and car or cash allowance programmes.

Fleet managers – and the wider fleet industry as a whole – must also be mindful of the impact of the outcome of the Government’s consultation on the taxation of benefit-in-kind (BIK) and employee expenses that includes an examination of Approved Mileage Allowance Payments made to employees who drive their own cars on business journeys; and, obviously, Brexit with warnings from the likes of the Society of Motor Manufacturers & Traders (SMMT)that a failure to reach trade agreements could trigger a £1,500 new car price increase and a 10% rise in vehicle service, maintenance and repair (SMR) bills.

Indeed, at ACFO’s recent ‘The State of the Nation’ seminar I said I could not recall such a multitude of developments that were “leading to a perfect storm of bewilderment, misunderstanding and incomprehension”.

Against that background, it would be easy for businesses, particularly in respect of ‘perk cars’, to think “it is all getting too complicated” and decide to simply ‘buy’ employees out of the benefit.

But fleet managers must be very aware of the law of unintended consequences – change one aspect of fleet operation and it can necessitate changes elsewhere. What’s more, the critical factor is the total cost of ownership of a vehicle. Taking account of all costs – not just operating costs but also the cost of borrowing money, vehicle discounts, insurance etc. – it remains cheaper for a business to run a car than a private individual.

Consequently, today’s fleet operators have to be jugglers. The trick is to keep all the plates spinning in the same direction at the same time, while more plates are being added and that challenge will become ever more difficult as the impact of decisions made around the issues outlined earlier become apparent.

Benjamin Franklin, one of the USA’s founding fathers, once said that “by failing to prepare, you are preparing to fail”. With so much change sparking huge uncertainty and confusion across the fleet industry, operators should, at the very least, be aware of what is occurring and have plans on the drawing board as to how their vehicle operations may need reshaping so as not to be caught off guard.

Today, it is not just the traditional company car, but how business needs to cope and manage the ever-growing portfolio of mobility. 

We are still all doing the miles, but how we travel that mile is now a different question.

The fleet industry has never stood still and I don’t think it ever will as it adapts to changes in legislation and the way society operates. Fleets and fleet managers have always adapted to whatever challenges have been thrown and while the ingredients may change, the ultimate consideration will remain the total cost of vehicle ownership. 

In that respect it is critical for fleet managers to not only be jugglers, but also have a bit of ‘Mystic Meg’ about them. 

Just as drivers need to anticipate the road ahead to avoid a collision, as fleet managers we need to be able to read the minds of legislators, anticipate marketplace changes and understand how internal business developments will impact on fleet operations. 

Ultimately, the role of the fleet manager is to do what is best for their employer.

Author: John Pryor (pictured), ACFO chairman

> READ MORE - FN50 2017 supplement


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