The Volkswagen Group had plenty of new product and concept cars to show at the Geneva Show from the new Audi TT, Porsche Macan diesel, SEAT Leon Cupra, Skoda VisionC, VW Golf GTE and T-ROC concept. Collectively, the individual brands have their own fleet operations, but one man has the job of co-ordinating Volkswagen fleet activities across the Group.

Martin Jahn is a Czech national who began his career with the Czech government agency CzechInvest, charged with supporting foreign companies wishing to invest in the Czech Republic. He rose to become the organisation’s CEO before being appointed as Czech vice prime minister for economic policy, before joining Skoda in 2006. Two years later he moved to Moscow as CEO of Volkswagen Russia and moved to VW in Wolfsburg in 2010. His current job is to co-ordinate fleet sales of the Volkswagen Group on a European and ultimately global level.

‘We see increasing need for centralised global fleet management, so basically our job is to support the top clients who are buying from the whole group, to support tender co-ordination and also to support the brands, with best practice all around the world. Basically our job is to make sure that we keep our number one position in fleet sales,’ he said.

For Volkswagen Group purposes, fleet does not include rental business, so in Western European fleet terms, the company is looking at around 30% of total sales as fleet business. ‘We are number one with close to 30%,’ says Mr Jahn. In Brazil, the fleet market is also quite big for the VW Group at around 20% of the total market. ‘In Brazil, we are number two behind Fiat, which is a bit unusual,’ observes Mr Jahn. This business is mostly with private companies.

‘Government business plays a very small role in most of the countries, apart from China. And out of total sales in China, fleet business is responsible for only 11% of the market. But of this 11% some 70% to 80% is Government business.’

China

This is made up of Government cars and also the Chinese taxi business, which is run by the Government, and the police.

‘In this segment we are also very strong, with 30% market share, making the

Volkswagen Group number one,’ says Mr Hahn. ‘The remaining 10% of fleet business in China is private,’ he continues. ‘It’s supposed to grow and everybody expects that in two or three years it will grow, but it is growing very slowly. ‘First of all companies do not see the need to provide a company car as a benefit in China. It will change, but not yet.

Then there is the problem of the licence plates, because most of the need for fleet cars is in big cities and in big cities it’s impossible to get new licence plates, so that’s another hurdle. Then another hurdle is leasing. It is not developed in China, although it is being developed now, called long-term rental.

‘We all have high hopes for China, but I have to say from the current development in fleet business, we are a bit disappointed.’

South America an important market

Looking elsewhere around the world, fleet business is small in India and in the US it is does not play a big role. ‘It’s also very limited if you do not count cash allowance, which is sort of fleet but not really. So the US is also not a big market,’ says Mr Jahn.

‘Then we have some other markets like South Africa and Argentina where fleet business also plays a significant role, around 20% of the market and Mexico is also an important player. In Russia, the fleet business is about 12% of total, but we will see how the situation in Russia develops.

‘So in terms of importance for us, Europe is number one, Brazil is number two and then on the third level we have countries like Mexico, Argentina, China and South Africa.’

In Europe the UK has become Volkswagen Group’s top fleet market, having overtaken Germany, says Mr Jahn. Then he places Sweden, Germany and France in the middle, where the markets have become relatively stable although growth is currently quite low. Behind these he places the more volatile markets such as Spain and Italy, where business is now picking up. ‘Then we have countries where the business actually died, like Greece, so there’s a wide spectrum of market developments.’

VW takes a positive view of fleet business this year because many fleets will need to renew their vehicle stock, so Mr Jahn expects to see European fleet business grow by around 1% to 2%.

Volkswagen Group Finance

VW also has a group wide finance division with Volkswagen Group Finance. ‘Volkswagen Group Finance is the biggest car leasing company in Europe,’ says Mr Jahn,

‘The centre of gravity is Germany where the company has 60% market share and in the rest of Europe they are picking up and building up the network, so I think the company is ready to grow in most of the countries and I think that in a short period of time we will have excellent coverage of captive services in all fleet relevant European countries.’

Alternative fuels?

The Volkswagen Group has been charting the trends in fleet business over the past few years, from electrification of the fleet, with electric cars, plug-in hybrids, corporate car sharing and concepts such as pay-per-use or pay-per-km. ‘But we have realised that fleet business is relatively traditional and conservative,’ says Mr Jahn.

‘Even recently we talked to our clients and asked if they wanted car sharing or electric cars? The answer was “yes we do want electric cars”, but fleets tend to want one or two. Similarly the need for car sharing is quite limited. Everybody wants it because its sexy, it’s kind of window dressing,’ he continues. ‘But there is no really significant business case, because a car remains an important employee benefit, in Europe at least.

'There are still significant tax advantages, so I don’t think this model will change.

The car is not becoming a commodity and there are still strong differentiations – design and technical features – between the brands.

‘People just need cars in Europe and they want them for status. There will be changes. We will sell more electric cars in fleet. We will have the models and plug-in hybrids, but I do not expect any major change. Maybe more use of telematics, more connectivity, lower CO2. Those are the main trends.’