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FUTURE OF FLEET
Fleet World gathers expert opinion to predict what will happen in the sector in 2022 – and beyond...
VISION 2022
As another disjoined year comes to a close, businesses will be hoping for not just the ‘new’ normal, but for any normal they can get. By John Challen.
The automotive market is going through the biggest change in its history. If you think you’ve read that before, you’re probably right because it’s been said a thousand times. But that’s because it’s true – potentially.
How things will play out is unknown but, with 2022 around the corner, we thought it was a good time to ask some people who had an informed idea about what to expect in the coming 12 months.
“Fleet managers are working in a fascinating and dynamic sector, in roles that, if performed well, have the opportunity for great exposure to senior management and decision-making in their organisations,” says Peter McDonald, mobility director at Ohme. “The work required to electrify fleet – and the ecosystem-wide efforts to reduce carbon – are going to require fleet managers to collaborate, think strategically and put governance in place to ensure rigorous operational performance in a way that’s been unseen in the last decades.”
McDonald concedes that reducing mobility costs and driving operational efficiency will be difficult and will also require professional management. “Fleet managers will have to balance these whilst simultaneously effecting two new major objectives,” he predicts. “Reporting and reducing carbon footprint in Scope 1-3 emissions and managing a seamless operational and customer experience to prevent disruption with the technology transition.”
The idea of individuals being thrust into high-profile roles creates an “optimistic and exciting scenario”, according to the Ohme man. “In those roles, they will take the mandate to reduce carbon footprint through pulling on a host of policy and investment decisions: What type of journeys, both operational and personnel-related, are my teams taking and should they be taking? Is there a less carbon-intensive way to achieve the same aim?
THE SEARCH FOR SOLUTIONS
“The consequences of thinking big are huge, beyond the decisions around vehicle acquisition fleet managers will often be a stakeholder in the business operations, distribution and customer proposition,” he adds. “For instance, the physical location of shops, or the frequency of logistics deliveries, could cut a significant amount of carbon. Factoring in capital costs and liquidity implications for changes required make the role complex and interesting.”
Arguably, reasons McDonald, this will all be much easier when there is a price for carbon as it will make these business cases less theoretical and more auditable.
“The contrarian view is this will all be immensely difficult, fleet managers will be challenged making the necessary changes, pulling together divergent stakeholders across such a complex problem where it’s impossible to keep all parties happy. Procuring new electric vehicles will come at a higher initial cost, as will the infrastructure required to make them operationally effective. Whilst the business case will pay off over time, and economies of scale will reduce prices, this will take some years to realise.”
PLENTY OF CHANGES AHEAD
Meanwhile, Paul Hollick, chair, Association of Fleet Professionals (AFP), is geared up for another year of uncertainty for the industry, to match the ones that have gone before it. “It’s no exaggeration to say that the last couple of years have been more eventful than anyone currently working in fleet has previously seen,” he says. “And, looking ahead to 2022, the rate of change doesn’t appear to be slowing. There are dozens of subjects potentially demanding the attention of company car and van decision-makers.”
The first example he gives surrounds the rapid increase in EV use and the subsequent impact of charging becoming more critical.
Peter McDonald, mobility director, Ohme
Paul Hollick, chair, Association of Fleet Professionals (AFP)
“Two issues need resolving here. The first is providing infrastructure for those who live in an apartment or terraced house and require access to overnight, on-street facilities,” says Hollick. “At present, this is almost non-existent. The AFP has formed a new Kerbside Charging Group to help tackle this need and new measures were also announced in the Autumn Budget. The second is to upgrade the public charging infrastructure, which is coming under considerable pressure. Again, the only answer is for large sums of money to be made available.”
On a related note, Hollick believes that fleets need to develop methods of equitably reimbursing employees who are charging their vehicles at home. “This situation has recently been made easier with the introduction of specific AER amendments, for which the AFP lobbied. However, difficulties remain. At present, drivers can be reimbursed at ‘actual cost’ or AER but with energy prices escalating, this no longer represents a fair amount when the majority of vehicles are being charged by their energy company at more than 18 pence per kWh.”
Looking beyond passenger cars, the AFP man sees a lot of potential for LCVs over the next 12 months. “If 2021 was the year the electric company car has really taken off, 2022 could prove to be the equivalent for the electric van,” predicts Hollick. “While there are still holes in the market such as the absence of a commercial 4x4, eLCVs are finally becoming available in a much wider range of designs and payloads. We are currently seeing operators starting to get to grips with the ways in which these vehicles can be used, given the new strategies that may be required to take account of range and payload.”
MOBILITY ON THE MOVE
Future forms of mobility cannot be ignored either and Hollick expects more visions of personal transportation to come to the fore in 2022. “Last year, Covid created an unavoidable pause in this process because many mobility services are based on shared use of assets,” he explains. “However, as some kind of normality returns, we are seeing interest in the subject revive quickly. Many fleet managers expect that their professional future lies in evolving into a mobility equivalent of their current role and we are seeing strong demand across the AFP for advice, training and guidance in this area.”
Back to the current-day vehicles, Hollick touches on the AFP’s prediction that fleet numbers will soon start to grow after successive falls in recent years. “This may have been momentarily postponed by the pandemic but we believe that the tide is very much in the process of turning,” he says. “Low taxes on EVs are powering a very high level of interest in company cars, including from people who have previously taken cash options, as well creating momentum behind EV-based salary sacrifice schemes, which meet the needs of many employees. All of this should help to power an electrified renaissance for fleets.”
Spencer Halil, Alphabet’s chief commercial officer, shares the same enthusiasm about fleets, but believes the rule-makers need to add more clarity many scenarios that affect drivers. “I would consider electrification, digitalisation and the rising expectations of our customers as opportunities rather than challenges for 2022,” he states. “The biggest challenge is the fact that the government hasn’t yet got its act together in terms of deciding what direction we’re going to move forward in around some of those topics.
“For example, we don’t have tax certainty for our customers,” says Halil. “They don’t know how long the incentives around EVs will be maintained or how extensive some of the costs are going to be around driving into the major cities. Road pricing is coming and I think everyone expects it, but not knowing when and to what extent is creating uncertainty.”
Halil also touches on the need for proper charging infrastructure. “We’re moving to EV, but not all customers have the same access to charging infrastructure,” he reasons. “Drivers are the ones that have to deal with solving that problem and hope that the charger roll-out continues and other solutions follow.”
Spencer Halil, chief commercial officer, Alphabet
CONTINUE TO EV CHARGING
