Business car or mobility package?
Instead of discussing the finer points of operational leasing agreements they seem to be rather more inclined to focus on car-sharing along with mobility packages that include everything from tram tickets to bicycle rental. Such ways of getting from A to B are of course more environmentally-friendly than jumping into a diesel hatchback; even one that meets the latest and most-stringent exhaust emission regulations.
In some cases lessors have no option but to seek alternative ways of providing business transport given the legislative pressures that are being imposed on both them and their customers. Other imperatives include the need for fleet operators to be ‘seen to be green’ by their customers, which means doing all they can to shrink their carbon footprint and minimise emissions of NOx and particulates.
“In future the provision of a financed vehicle with all the added ancillary services required to keep it on the road will simply not be enough to meet the changing mobility needs of companies and their employees,” says Hitachi Capital Vehicle Solutions chairman, Simon Oliphant. “Travelling on company business may mean using public transport ahead of using a car.”
Launched in June 2015, initially in the Netherlands and Luxembourg, LeasePlan’s SwopCar car-sharing service is rapidly increasing in popularity, says chief commercial officer, Nick Salkeld.
“We developed it in order to meet the growing demand for driver mobility solutions that go beyond traditional lease products,” he explains. “As a result of trends such as urbanisation, sharing, eco-awareness and the rise in the use of mobile devices and connectivity, we foresee a shift from vehicle-oriented services to services oriented around the needs of the individual driver.
“To stay ahead of these changes we’ve developed a mobility strategy. It gives us the opportunity to extend the LeasePlan offering from full-service vehicle leasing to a range of forward-thinking, flexible solutions,” he continues. “Our company will be a one-stop-shop for corporate mobility by delivering a package of flexible, customisable offerings including rental, short- and long-term leasing, car-sharing and pool management for everybody from large international clients to small and medium-size enterprises and private leasing clients.
“This strategy has resulted in SwopCar among other solutions,” he says. “By allowing a company’s employees to take and share a SwopCar when needed, vehicle utilisation is maximised, carbon emissions are reduced and the need for parking spaces is considerably diminished.”
Eligible employees can check vehicle availability and plan their trip accordingly by using an online reservation platform and a smartphone app. They can do this themselves without constant recourse to the fleet manager who in turn no longer faces the burden of organising a traditional pool car service.
Cleaning, refuelling and maintenance are all taken care of by LeasePlan’s network of service providers. “We’re offering more flexibility and lower costs,” Salkeld says.
“We’re now rolling out SwopCar in over 11 countries,” he continues. “Among those we are focusing on are Italy, Spain, France and Portugal.
“We’re getting a lot of interest from other countries outside Europe too, including the United Arab Emirates (UAE). We should be present with it in at least 20 countries within the next 12 months or so.”
Aware that it needs to address urban air pollution, the Chinese government is turning Lingang, the southern district of Shanghai, into a Green Zone. It involves placing tight restrictions on anything powered by an internal combustion engine.
Business people and private motorists still need to get about, however, and public transport is not always the answer. As a consequence BA-SHI, Arval’s Chinese partner, suggested that the government sanction the introduction of a car-sharing programme similar to one that Arval has developed for use in other markets.
Adjusted to local requirements, the scheme was successfully piloted in 2015. In March of this year it was implemented using an initial 30 electric Roewe e50s plus five hybrid Roewe 550s, all Chinese-built.
Operating under the U-LIN CarSharing banner, the programme is starting by addressing the private market. It will then move on to tackle the corporate sector through Arval Jiutong, created as a joint venture last year.
The scheme is being supported by the Alipay e-payment service.
“Until recently car leasing companies were convinced that car financing and company car service delivery were their core activities and always would be, but we were wrong,” says Kent Bjertrup, chief commercial officer at ALD International. “There is only one way to continue to succeed in car leasing and fleet management in Europe and in emerging countries and that is to consider the complete mobility chain.”
With that aim in mind, ALD has launched ALD Free. It describes it as a platform that will enable employees to shape their own, custom-built mobility packages and view their travel history 24/7.
All sorts of combinations are available ALD says, from an electric bike to a chip-card that will enable staff members to avail themselves of various combinations of public transport. Individuals can immediately see which options are available within their budget and their employer's requirements.
“It means companies can give their employees more control over their own mobility which makes them more attractive places to work,” says ALD Automotive marketing and strategy manager, Lonneke van der Horst.
There is growing interest in mobility packages that include everything from bus tickets to bicycle hire and it is an area LeasePlan is addressing. “In the Netherlands we’ve got Mobility Mixx with over 100,000 users of our mobility card and we’ve got a similar scheme in Belgium,” he says.
“We’re offering mobility programmes in a number of other countries too and they are pretty successful,” Salkeld continues. “But in each case we have to look at the level of demand from our clients before we introduce such schemes and we have to recognise that they may not be suitable for all countries.”
The Netherlands can support Mobility Mixx because it has such a well-developed infrastructure. Not all countries do.
Salkeld does not see schemes such as SwopCar and Mobility Mixx gradually eliminating the traditional company car acquired under a contract hire with maintenance agreement.
“Instead I think they will expand the market,” he observes. “They represent incremental business.”
Far from being in decline, operating leases still have plenty of potential for growth, he contends. “In France and Italy their level of penetration is no more than 10% and 15% respectively while in Poland it is less than 10%,” he points out.
“Remember that the demand for operating leases is still helping LeasePlan achieve year-on-year growth levels of over 8%,” Salkeld says. “The traditional company car continues to account for 95% of our activities.”
Lease periods may shorten however in line with the needs of clients and reflecting the fact that they may be being offered contracts by their own customers that are shorter in duration.
“That’s why we’ve introduced FlexiPlan,” Salkeld explains. “We originally launched it in Spain and it describes a lease that can run from one to 24 months, that is fully flexible in terms of mileage and that is not subject to a termination fee.”
Assuming the customer can pass LeasePlan’s credit checks, it can be the ideal solution for start-ups that cannot be certain about what their future transport needs are likely to be, and for businesses in countries still facing a degree of economic uncertainty. “We’re working on implementing it in Greece for example,” says Salkeld.
BMW-owned Alphabet is not ignoring alternative approaches to mobility and its AlphaCity corporate car-sharing programme is now well established. Electric cars are being promoted under the AlphaElectric banner and the company can analyse a fleet and the routes its drivers use to determine where battery-powered vehicles can be integrated into the mix.
It has recently revamped its AlphaGuide app which delivers all sorts of useful information that users can access on their smartphones; what time they should leave to arrive at an appointment on schedule for example. More features will be added as the app evolves further.
Determined not to be left behind, and following a somewhat different tack, Volkswagen Group is investing US$300m in ride-hailing provider Gett.
Active in over 60 cities worldwide, including Moscow and New York, Gett enables consumers to book on-demand transport for both people and goods. Its Gett for Business service is aimed at corporate clients and is used by over 4,000 companies worldwide.
The deal will involve special car funding packages being made available by VW to licensed Gett drivers. Gett will be rolling out its services across Germany during the first half of 2017 and plans to expand elsewhere in Europe.
VW board of management chairman, Matthias Müller, says; “Ride-hailing will be at the centre of our new mobility-on-demand business which we are building up as our second pillar alongside our classic automobile business.
“Our investment in Gett gives us instant access to a service which can benefit people all over the world,” he adds. And Gett and VW intend to co-operate over autonomous driving.