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Four big changes that will redefine fleet management

May 4, 2018

When Blockbuster LLC closed its doors in 2013 it was clear the home entertainment industry had changed forever. The smart companies, like Netflix, began to reimagine the way they operated – and in turn redefined how the industry would work.

Right now, fleet management is about to experience a similar shift. And it’s going to take new kinds of fleet solutions to make the most of it.

Four Big Reasons Fleet Management is Changing

The Netflix story is one of the greatest examples of technological disruption there is. And five years on the rate of technological – and social – change is faster still.

As a result, industry-defining moments are coming thick and fast. And just like streaming video transformed the rental market, fleet managers are about to witness a cultural shift in attitudes towards transportation dictated by four main factors.

1. The environmental imperative

The first factor is an increasing awareness and responsibility for vehicle emissions, both among organisations and the general public. A recent report from the World Economic Forum shares that greenhouse gas emissions are growing by around 52 billion tonnes of CO2 equivalent every year. A growing understanding of this – and, in turn, new legislation to help control emissions – drives a lot of behavioural change when it comes to vehicle selection, ownership, and other travel-related decisions.

Most notably, the constant improvement of hybrid and electric technology, and new regulations that drive these developments, will increasingly affect the life of fleet managers over the next few years.

Right now, there are both financial and reputational benefits to be found matching some drivers with electric and hybrid vehicles – including lower benefit-in-kind costs and generous government incentive schemes.

(To know more about which drivers could benefit from electric and hybrid vehicles – and which drivers wouldn’t – read ‘The Right Car for the Right People’.)

2. The shift to cities

Growing urbanisation could have a big impact on the way we organise and manage fleets.

It’s predicted that 70% of the world’s population will live in megacities by 2050[1]. As more and more people move into cities, the need for personal transport will take a back seat to increasingly efficient public transport alternatives.

In fact, industry experts predict that increased urbanisation will see the rise of the first car-free cities[2] (or at the very least, car-light cities). There are currently five UK cities that are adding carbon tax to their centres, making owning and driving a car or commercial vehicle in these environments much less desirable.

And if we look further afield, an example of what our future may hold can be found in Singapore. The city-state is currently working on a 15-year mobility scheme that will act as the basis for smarter, long-term urban transportation. These Intelligent Transport Systems (ITS) currently include an autonomous vehicle initiative, 24/7 traffic monitoring, and junctions managed by ‘electronic eyes’.

3. More ways to travel

Which brings us to our third factor: continuous innovation, a huge increase in travel options, and an increasingly expectant and demanding generation of consumers are shaping the very fabric of transport.

For instance, autonomous vehicles, community car schemes, and free public transport in cities can all present themselves as more convenient options than owning or leasing a vehicle.

If some of these things sounds like fantasies of a far-flung future, bear in mind that according to research by RethinkX, 95%[3] of car miles will be covered by autonomous cars within 13 years. The future is not so far away.

4. From ownership to usership

In every industry across the world there is talk about how new technologies are changing peoples' expectations. Modern consumers (including the people that make up your organisation) are armed with two things: an expectation of convenience, thanks to the growing availability of online and app-based services; and the awareness that there is a huge amount of choice and competition to meet their needs.

In our market, the ability to summon a car at will from your mobile phone has had a dramatic effect on attitudes when it come to subjects like car ownership.

Today, people want convenience. They want the easiest way to get from A-B, whether that’s car sharing, public transport, automated vehicles or owning a car, and they want it now. The future, as predicted by French politician Gilles Vesco, is that “the car will become an accessory to the smartphone.”

To illustrate, a recent YouGov poll showed that 43% of Londoners regard Uber as a genuine alternative to owning a car[4]. When we’re told the future is mostly based in megacities, it’s hard not to see this attitude growing in popularity.

For fleet managers, this means the job is about to change. They’ll start thinking less about providing vehicles, and more about meeting the broader need for personal mobility through shared fleets, automated vehicles, public transportation, transport allowances and more.

A changing role

With the parameters of fleet management set to change, you have two options: you can try and minimise the impact of this transformation, or you can actively drive change. But, whichever way you look at it, there’s no sense in standing still.

The problem is, there’s no one-size-fits all fix for mobility solutions designed to meet the needs of individuals. And when you have a whole fleet of individuals to cater for, the complexity rises exponentially.

For now, the best way to prepare is to improve your awareness of the changes that lie just over the horizon. These things aren’t all going to happen at once, but our business started preparing for them long ago, and can help you with your transformation.

As part of our organisation’s increasing focus on the future, Volkswagen Financial Services | Fleet is aiming to become a leading, global provider of sustainable mobility by 2025. This strategy will guide us to introduce new products that lean towards hybrid and electric vehicles, alongside those that target the increasing demand for personal mobility solutions.

As the industry continues to evolve, the role of fleet manager will become indispensable in helping organisations navigate these changes and provide the best mobility options to their employees. We’re always on hand to share our expertise with you, and help you identify the solutions and technologies that can add the most value to your organisation. Get in touch.

[1] [2] http://global-influences.com/urbanisation-green-mobility/

[3] https://www.rethinkx.com/press-release/2017/5/3/new-report-due-to-major-transportation-disruption-95-of-us-car-miles-will-be-traveled-in-self-driving-electric-shared-vehicles-by-2030

[4] http://uk.businessinsider.com/studies-uber-drivenow-demand-private-car-vehicle-sales-2017-8