Leasing companies are gearing up for a great deal of change in the coming years and this was the subject of the third annual Frost and Sullivan Intelligent Mobility Conference, staged in London recently. The working title of ‘Future Business Models in Connected and Automated Mobility’, set the theme for the day.

The shift from the traditional company car model of business mobility to a new model was a theme throughout the conference, described by Frost and Sullivan senior partner Sarwant Singh as the shift from TCO (Total Cost of Operation) to TCM (Total Cost of Mobility). Setting the scene, he outlined the transformational shifts underway in business travel, including new business models in car sharing, which grew by between 40% and 50% between 2013 and 2014.

Emerging car share models Car sharing is developing in different ways. Leasing companies will be familiar with corporate car sharing schemes, designed to let companies offer its employees who may not be eligible for a company car the short‐term use of a company owned vehicle. Car share clubs such as Zipcar or Car2go offer rental by the hour in city locations with the convenience of pick up and drop off from city public spaces. In addition there are peerto‐peer car sharing schemes where people choose to share cars with others, usually through car‐sharing schemes.

In 2014 Frost and Sullivan reckons that across Europe, there were 49,368 cars involved in ‘traditional’ car sharing schemes, involving 2.5 million people, 81,380 in peer-to-peer schemes involving 1 million people and 2,896 in corporate car sharing schemes involving 250 companies.
 
Looking ahead, Frost and Sullivan expects significant growth in the sector by 2020. Then the company believes there will be over 236,000 cars in traditional car sharing schemes, involving 14.9 million people, 222,210 cars in peer?to?peer schemes involving 3.3 million people and 84,649 cars in corporate schemes, involving 4,000 companies.
 
Similarly car-pooling is expected to grow from schemes with 24.1m members in 2014 to 45m members by 2020.
 

Hitching a ride

Ride sharing schemes are another carsharing variant in that these are designed as rivals to taxi operations or otherwise as means of generating income for the vehicle owners involved in the schemes. There are similarities even so and Singh identified different types of ride sharing schemes.

The key to them all is the smartphone, which is the tool linking those operating the scheme with drivers and passengers.

Uber was the name that recurred throughout the conference. The US-based company operates in 58 countries, 311 cities and has 7.5 million customers. Its operations have proved controversial in several cities around the world, meeting opposition from established taxi operators and licensing authorities. Singh told the conference that Uber sees itself as a logistics company with a mission to carry three passengers and three parcels per car.

How much of a threat is Uber to established taxi operations? Shai Agassi, the founder and former CEO of Better Place told the conference that since Uber began its operations in New York, taxi revenue per cab had fallen by ‐5%, within the limits of normal expected variations in revenue.

Freight expectations

Besides ride sharing, the rise of the smartphone app opens up new possibilities for the transport sector. Back loads – a return load for a truck operator once the original delivery has been made, have been a problem for many years. Although truck utilisation has improved, the problem still remains and app‐based systems offer another way of giving transport operators a means of maximising truck use and profitability.

Frost and Sullivan gave developments in North America as an example, where mobile‐based freight brokerage systems are expected to grow rapidly. Schemes such as cargomatic, Coyote, Transfix and Keychain Logistics have already appeared.

In 2014 these systems generated revenues of €0.4bn and by 2020 compound annual growth of 39.3% is expected to push revenues to €15.8bn.

Frost and Sullivan also expects to see a convergence of vehicle rental businesses, currently split between car sharing, car rental and car leasing. This will come with a shift towards integrated mobility where vehicle manufacturers, leasing companies, travel management companies, software platform providers, fleet

management providers, public transport operators, integrated solution providers and car rental companies will be increasingly integrated into new mobility platforms, a process that has already begun.

Ladies First?

More women drivers than men are expected to become the norm in many countries. Frost and Sullivan data suggests that 51% of driving licence holders in the United States are already women, with 50% in Canada, 47% in the UK, 44% in Japan, 44% in Italy, 41% in Spain and 40% in Brazil. These numbers are expected to grow and since women are said to prefer leasing vehicles to men, this development is likely be significant for leasing companies.

In Japan, Nissan already has 300 ‘Lady First’ dealerships which feature child play areas, stylish interior design and female sales and technical staff.

Cars connected to the Internet are already on the road in number. Frost and

Sullivan reckons that there were some 8.5 – 9m on the roads of North America and Europe in 2013 and this is likely to grow to between 34‐34.5m by 2020.

Although vehicle technology already makes autonomous driving a possibility,

Internet connectivity will extend the possibilities available and the shift

towards autonomous driving is another emerging factor for drivers and fleets to take on board. The shift to autonomous driving will also have implications for vehicle insurance, as the current driver risk‐based model may be less relevant. This may see a reduction in vehicle insurance revenues and revised insurance offers.

Corporate mobility shifts

Of particular interest to leasing companies and customers was Session 2: ‘The Future of Corporate Mobility’, which included presentations from Alphabet

International and LeasePlan. Since one of the threads in the conference was about future integration, we also gained an insight into how the operational leasing schemes of today are likely to transform into the mobility platforms of tomorrow – the shift from TCO to TCM.

That thread was picked up by Graeme Banister from Frost and Sullivan who told

the conference that some €453bn worth of new lease contracts are written annually and the market is growing at between 5‐10%, while around €1.1 trillion is spent annually on business travel, with the global market growing by around 10%.

A small sample taken in Belgium, France, Germany, the Netherlands and the UK among those who have a company car or cash allowance shows some interest in being granted a mobility allowance instead of a company car based scheme, with more interest in Belgium and the Netherlands.

Samples taken in SMEs and large companies also show that where there is existing corporate car sharing, pooling or car club use interest is expected to grow by 16% on average over the next five years. Although corporate car sharing has grown slowly in recent years, with around 4,900 vehicles in use now, this is expected to benefit from average growth of 71% between now and 2020 and reach 84,649 vehicles.

Smartphones are key

This is likely to involve the development of multi‐modal transport systems that can be accessed from mobile devices.

Carsten Kwirandt, head of marketing and business development at Alphabet International told the conference that traditional lease cars will be replaced. “The customer is at the centre and we must understand what they need,” he said, “We would prefer them to have a one‐stop shop experience.” This might involve a corporate car sharing scheme and a mobility budget for the end user so they can choose how to spend it.

Long distance travellers use multimodal transport anyway, a combination of car, rail, air, taxi and other transport modes. Co‐ordinating this travel and developing a model that can be used for booking, tickets and payment is the objective of the All Ways Travelling Consortium, a project initiated by the European Commission.

The project was outlined by Nigel Alston of Amadeus, which is a partner in the consortium. The first stage of the project, a study of multi‐modal transport has already been completed and the second phase is underway to develop a means of delivering an outline for a pan‐European system to be developed. Travellers are becoming more selective and want a smooth door‐to‐door travel experience, said Alston. Amadeus estimates that there will be a doubling of travel need from 2014 to 2030. Obstacles to development of a system include technical standardisation. Alston identified a need to define standards. Business mobility is often handled by a range of departments including human resources, expenses and fleet, which makes it difficult to find information.

If we take integrated mobility as combining fleet and business travel, Frost and Sullivan has found that the most preferred service in using an integrated solution is hotel and flight booking (55%) followed by car rental (53%), train ticketing (44%), fuel payment (41%) and a trip planner (38%). The least preferred options were car pooling (16%), cycle rental (11%) and a navigation service (8%).

Priorities changed when respondents were asked about mobile applications once the trip had started. Here journey planning generated the most interest (49%), followed by an airline boarding pass (43%) and online check‐in (41%), arguably all things that travellers would be familiar with.

Who did Frost and Sullivan’s respondents think would lead the adoption of mobility solutions? Step forward leasing companies who polled the largest share of the vote with 25%, followed by rental companies with 16%. Vehicle manufacturers were also expected to play a part with 14% of the vote.