Today more than ever, every Fleet market is being challenged due to the powertrain technology evolution, the C02 emissions, the taxation and the need for flexible mobility solutions. The fleetcompetence Group is providing hereafter some insights from our respective local Partners for 4 key markets: France, Italy, The Netherlands and Germany.

France

“Aficar Mobility” – Alain Guillemier

“Aficar Mobility” – Alain Guillemier

Overall Current Market Challenges.

In 2020 Fleet managers do still have large choice of powertrain OEM offering (diesel, petrol, hybrid, plug-in hybrid and electric). At short and mid-term, main challenges rely on the knowledge of the technology and its right usage, the employee profile and the fiscal impacts to be considered while keeping the right balance between TCO and package attractiveness.

What would be your right strategy to apply based on the current challenges and why?

Knowing that taxation in France is based on CO2, converting a diesel fleet to petrol can cause costs to explode. It is better to be warned. Avoiding the systematic conversion from diesel to petrol and remaining faithful to diesel for heavy-duty drivers (over 20,000 km/year) will avoid unpleasant surprises. But this does not address the need for companies to reduce the impact of their fleet on the environment. To do so, they must switch to new propulsion modes. Three major technologies are now available: hybrid, plug-in hybrid and electric. Attractive in a transition phase, the simple hybrid (i.e. non-rechargeable) is now reaching its limits in terms of reduced consumption. More expensive to purchase, the rechargeable hybrid offers an excellent solution by combining the advantages of thermal and electric power.

What are the different factors/key elements to focus on for change?

The WLTP regulation will become administratively and fiscally binding on March 1, 2020. The CO2 emission values of new vehicles will rise by about 30%. Fleet policies will then gradually shift towards a “greener” choice to enable compliance with ecological standards to be combined with minimisation of additional tax costs.

Italy

“GR Advisory” – Mauro Serena

“GR Advisory” – Mauro Serena

Overall Current Market Challenges

We clearly observe a request to remove Diesel powertrain from the market and more specifically from big cites (Milan will close the city to the diesel engines in 2030), while it has been demonstrated that Euro 6 diesel engines are among the greenest ever manufactured.

This situation has contributed to a significant reduction in the current and prospective residual values of diesel cars and forces the leasing companies to make important choices for the future, which they are facing with very different strategies. Some leasing companies have increased prices for diesel cars by up to 30%, favoring hybrid cars and granting discounts on diesel cars to customers who decide to introduce a significant number of HEV, PHEV and EV vehicles. Offers on diesel commercial vehicles for up to 5 years are hesitant. In general, the need to innovate diesel and move to other technologies caused a significant increase in rental fees in the last two years.

What would be your right strategy to apply based on the current challenges and why?

There is currently no better car list engine model than others. The TCO of diesel cars is still much lower than that of hybrid cars, especially for high-distance drivers, who are most of them and belong to commercial roles.

The latest report by Aniasa (association of leasing and renting companies) shows in the fleets of Italian companies an increase in 2018 of 142% of hybrid cars (almost 15,000), 366% for EV (over 2,500), towards which the “Tesla phenomenon” (1,943 Model 3 sold in Italy – fleets and private – in 2019) has contributed to change the orientation of top managers, not to mention over 8,500 new vehicles with LPG and LNG engines, which for light commercial vehicles in some areas of the territory, are the most convenient ecological motorization.

Facing all these developments, most of fleet managers are currently thinking of what the “Car List of 2025” could be for their companies, in relation to future trends, difficult to predict, leasing company offers, driver’s preferences. In addition, there are urgent current needs, such as protecting entry into areas that approved bans or restrictions on diesel car traffic. So it is important that the strategy is supported by a future vision (green cars, connected, self-driving and shared), applied in a very flexible current model, which also includes the use of hybrid and electric vehicles through a Corporate Car Sharing model to overcome current bans, save on some routes and spread the culture of electric cars among company users.

What are the different factors/key elements to focus on for change?

Why has the Italian government not so far promoted a structured incentive plan for electric cars?

One of the possible answers to this question could be found by looking at the amount of taxes that inflate the price of gasoline and diesel: what would happen when drivers were buying massively electric energy instead of fuels?

Currently in Italy we are operating with very modest government incentives and timid penalties of BIK for drivers: the so-called “Financial Law 2020” modestly reduces the BIK on new vehicles starting from July 2020, for those with CO₂ emissions lower than 60 g/km, with a decrease of 1/6 compared to the current; it maintains the taxation of BIK unchanged for emissions between 60 and 160 g/km (the vast majority of company vehicles), penalizes by 1/3 the BIK of those between 160 and 190 and by 2/3 those over 190 g/km.

When we talk about hybrid vehicles we actually refer to three different technologies, which require a different degree of discipline by the driver: a full hybrid car requires only an appropriate driving style, while a plug-in cannot reach the desired results without a conscientious use, in particular in carrying out regularly all the recharges necessary to fully take advantage of electric engine and avoid an increase in cost and emissions. In this regard, Italy, which ranked at the last place in 2018 among the top 9 European countries by number of charging places (and this factor, together with the attitude called “range anxiety” has kept EVs at a residual level), during 2019 saw a considerable increase in their number. The network is constantly increasing.

The Netherlands

“Molthoff Fleetmanagement” – Jeroen Molthoff

“Molthoff Fleetmanagement” – Jeroen Molthoff

Overall Current Market Challenges

Currently the demand for EV’s is high and the diesel demand is declining. The main reason for this is the low BIK on full EV’s and the bad sentiment towards diesel. The demand for PHEV’s is at a low level. Main reason for this is the PHEV is not supported from government side. In 2013 and 2014 the PHEV was stimulated, but this stopped when it became clear that people where not driving electric in most of the cases, but only drove a PHEV for the lowest BIK possible. The BIK% for PHEV’s is now the same as for petrol and diesel cars, but the catalogue price is higher. The only way in which a PHEV could be beneficial for an employee is if the employer calculates a lower fuel amount in the car policy’s standard lease amount for PHEV’s.

From 2021 the BIK for full EV’s will increase further and the difference between EV’s and ICE cars will be lower. Nevertheless, we expect a further increase of the EV market share due to the increasing usability of EV’s, an increasing infrastructure, increasing demand of companies for zero emission cars and the ambition of the Dutch government to only sell new cars with zero emission by 2030. One of the biggest challenges in the future will be the growth of the electrical car park in relation to the growth of the infrastructure. With the current growth in the number of EVs (and a switch from natural gas to electricity for house heating), deep investments in the electrical network are inevitable. It is still uncertain whether the rapid growth of demand for electricity can be sustained by the expansion of the capacity of the grid.

What would be your right strategy to apply based on the current challenges and why

Sustainability will become more and more an item within society. Increasingly companies will be asked for their CO2 footprint. Since the fleet of a company is part of this footprint, it will become more important to think about a strategy to make a change to a less CO2 polluting fleet. A quick shift to all zero emission cars is in many cases not the best way, because of the many factors you should think about. For example, who are the users? Do we have the most appropriate infrastructure in place? What are the costs?

A smoother shift where the employer stimulates EV’s or PHEV’s would be more advisable. The advice is to start the transition to EVs with ‘low-hanging fruit’, ie vehicles with a stable and limited number of kilometers per day without the need for load capacity or towing weight and which can charge regularly. From there, the number of plug-in cars within the fleet can be organically increased. In this way people can get used to the electric driving. In the meantime, EV’s will get better and better, the infrastructure will be better, and more people will make the switch.

What are the different factors/key elements to focus on for change?

In order to concentrate on the key elements enabling to correctly set up your future strategy, the main levers remain the understanding of the market trend, your ‘As Is’ situation, your fleet and employee profiles. The assessment of your fleet is a minimum requirement in addition to the right understanding of the overall company business strategy enabling you to correctly draw the right KPI’s while keeping in mind as main levers your employees, green and related taxation and TCO management.

Germany

“fleetcompetence Group” – Thilo von Ulmenstein

“fleetcompetence Group” – Thilo von Ulmenstein

Overall Current Market Challenges

In Germany there are currently driving bans on diesel vehicles in 10 cities, including the capital Berlin and the major cities of Hamburg, Frankfurt, Cologne and Stuttgart. However, except for Stuttgart, the driving bans currently only affect individual streets in the city area.

However, the driving bans have led to an intensive discussion, which last year produced a legislation to promote e-mobility. This concerns both, direct subsidies for the purchase or leasing of these vehicles and the halving of the taxation of the so-called benefit-in-kind:

– For cars below a list price of EUR 40,000 there is a subsidy of EUR 6000.

– For cars with a list price above 40,000 Euro the maximum subsidy increases to 5000 Euro.

This subsidy applies to purely battery electric vehicles as well as plug-in hybrids.

In addition, since 01.01.2019, employees who use their e-company car for private purposes only have to pay tax on 1 % of half the gross list price of their company car as a non-cash benefit. This also applies to the flat-rate 1% regulation for journeys between home and the first place of work (0.03% per kilometre).

At the same time, vehicle manufacturers have begun to expand their product range, initially with a focus on hybrid vehicles. This should also help to avoid fines to the EU in relation to the set CO2 upper limit of 95g / km for passenger cars.

In 2019, almost 100,000 fully electric vehicles and plug-in hybrids were newly registered in Germany (30% more than in the previous year).

What would be your right strategy to apply based on the current challenges and why?

Vehicle fleet operators are currently in an extreme state of upheaval. On the one hand, this concerns the rapidly changing technology as well as the general conditions regarding driving bans, subsidies and taxation.

In order to keep fleet costs low and to remain an attractive employer, it is necessary for companies to deal intensively with this issue and to start initiating the necessary change process.

What are the different factors/key elements to focus on for change?

We strongly recommend starting a pilot project in order to build up know-how about market offerings as well as driving patterns and infrastructural needs. This requires the following steps:

• Identify business units that can be used for a pilot
• Prepare this carefully
• Involve drivers from the beginning
• Collect driving patterns within the BU
• Analyze infrastructure capabilities
• Review business needs – are they all crucial?
• Select adequate vehicles together with your drivers

Overall Conclusions

Alain Guillemier’ voice

From diesel, which is now banned in few fleets, to 100% electric, the choice of technological solutions offered today in France has never been so important. The main lever today for fleet managers is to choose the right vehicle for the right use.

Mauro Serena’ voice

Today, more than ever, it is important to maintain a rational and analytical approach to supporting the adoption of hybrid/electric cars in a corporate fleet. We believe that this approach should be based on a series of well-identified steps, considering the market trend, the new technology evolution, the fiscality, the employee profile, the TCO and environmental impact

The adoption of telematic technologies on board is crucial in measuring the real results on emissions and TCO that we can measure precisely when vehicles, as well as greener ones, will be connected and self-driving, thus allowing us to finally overcome the current barriers to telematics on board and make vehicle driving more efficient.

Jeroen Molthoff’ voice

The main advice on the short term is to follow the path of least resistance, so to start replacing ICE cars with plug-in cars and EV’s in cases where this leads to as few practical objections as possible.

On the long term the biggest questions will be, “Do we switch to other powertrains”, “When and How are we going to switch”.  The best advise remains to scan the current situation of  our company and its fleet and make a strategy which is based on the current situation and legislation, the overall strategy of the company and future changes in legislation and development of the car industry.

Thilo von Ulmenstein’ voice

Perception is Key!  Electric vehicles must be considered by each fleet operator in mid- and long-term strategy planning. Test vehicles as much as possible to get a clear picture of the capabilities

Let your drivers behind the wheel of e-vehicles – it’s all new – and the technology must be experienced.

Build up EV Knowledge! Understand your use cases for EVs. Get in contact with car manufacturers to understand their EV-strategy

Start now! Evaluate the potential within your fleet. Start pilot projects. Prepare cost comparison: set up a proper baseline of your (carbon driven) fleet today

As overall take-away, the right powertrain strategy and related WLTP will not only impact TCO but drastic changes in car policy which implies a review of all different parameters, as well a review of potential key partners enabling each company to go for flexible and sustainable Fleet strategy.

Considering the environment topic, the economic competitiveness, taxation and car technology at high speed, “don’t move” would mean “going backwords”. Moving forward means to correctly understand the current situation and already focus on key items with the aim to improve the future fleet strategy.

About fleetcompetence Group

Swiss headquartered fleetcompetence Group represents the largest international consultancy group of fleet experts, who are independent of any vehicle manufacturer, leasing company, fleet management provider or any other third-party vendors for fleet related services. Together with partners around the globe, the group support fleet operators in developing and implementing their international fleet strategy.

Each of those partners has a long-standing industry history either within senior functions at automotive service providers or as category responsible for procurement, fleet and travel within large corporations. Thanks to this extended Partners network fleetcompetence Group is able to support clients in up to 40 markets in their future respective challenges and provide local or international companies with the best options for short, mid and long terms solutions.

Rebstein, March 23rd, 2020 Alain Duez, International Senior Consultant fleetcompetence Group