Let’s look forward to what 2018 will bring for the European fleet community.
1. Car sales up
With close to 15.5 million new cars sold in 2017, the EU car market had a good, healthy year. Three factors predict a further increase in new car sales in 2018: a positive economic climate, rising employment and increased consumer confidence. But by how much? PwC Autofacts forecasts a 0.5% increase, to 15.75 million units. LMC predicts a 1.3% rise, to 15.89 million cars. A lot will depend on the UK market: Brexit-related uncertainty could have a negative impact, even on EU-wide sales.
2. Diesel dip continues
Undoubtedly, sales of diesel vehicles in Europe will continue to dip. Even in mature car markets like Germany, Belgium and the UK, diesel sales declined markedly in 2017. This trend will accelerate due to increasing legislative pressure on diesel, leading to greater customer concern with regards to diesel.
3. Diesel fleet sales down
Stricter regulations, environmental concerns and the convergence of diesel and petrol fuel prices are driving up the tipping point of the choice for diesel from a TCO point of view to more than 25,000 km/year. As a result, more and more corporate fleets are replacing diesel with petrol, or alternative powertrains. Diesel penetration was more than 70% in many European countries. It is now dropping to below 60%, and in some cases close to 50%. It’s a matter of time before diesels will become a minority. Once corporate fleets turn away from diesel, residual values could drop precipitously.
4. Alternative powertrains up
As diesel goes down, alternative powertrains will rise. The appetite is already there, but cost-efficiency and charging infrastructure need to improve. Although TCO for EVs today is still higher than for internal combustion engines, better batteries and increased autonomy will lead to TCO parity this year or the next. Add to that the growing list of cities installing low-emission zones, and EVs will become more popular. But charging networks lack coverage. Governments are not doing enough. Fortunately, OEMs, leasing and fuel companies are taking the lead.
5. Premiumisation of fleets
The trend towards larger, more expensive cars continues – also in corporate fleets. The SUV boom continues, and most manufacturers have at least one SUV model in their product range. According to Dataforce, SUVs now are the most popular segment in European corporate fleets. In a related trend, user-choosers are increasingly opting for premium brands, also in the smaller vehicle segments.
6. Outsourcing is trending
Outsourcing is trending, not just for corporates but also for private customers. The preferred formulas to transition from ownership to usership are pay-per-use and private lease. As it benefits not just end users, but also OEMs and lease companies, the private lease formula will continue to increase in popularity. With IFRS16 kicking off in January 2019 – when all leasing has to be on-balance sheet for the lessee – the larger multinationals will be switching some of the financing and funding of their fleets. And sharing will increasingly be used to optimise the usage of fleet vehicles. More sharing does not mean less cars: emerging markets need more units, and shared cars will need to be replaced faster.
7. Pay-per-Use models increase
Depending on the mobility modes used at various times, pay-per-use will increase. The attractiveness of this model is the transparency it offers to the user.
8. Connectivity versus privacy
Linked to transparency is another buzzword: connectivity. Connected cars enable real-time fleet and mobility management, generating considerable cost savings and increases in driver safety. However, telematics still has to contend with issues of data privacy legislation and user acceptance. On 25 May, the new EU General Data Protection Regulation (GDPR) will come into effect. Its aim is to harmonise data privacy laws across the EU, protecting citizens from privacy breaches in an increasingly data-driven world.
9. Mobility Management takes off – slowly
Corporates are interested in Mobility Management, but there are some obstacles to a quick uptake: the complexity of Europe, the lack of offers and expertise, and the difficulty to both convince employees and implement the required management systems. Frost & Sullivan thinks it will take another three years for Mobility Management to truly take off in Europe. Meanwhile, though, the offer keeps expanding and mindsets are changing. So it’s good to have at least some mobility options in your programme – be it public transport, teleworking, carsharing or carpooling, or multimodal solutions.
10. Internationalisation leads to globalisation
For fleet customers, cost savings are crucial. That’s why European fleet management has evolved to a category management in which procurement takes the lead – centralising decisions to optimise economies of scale. This process of internationalisation will lead to globalisation. Hence, in the fleet and mobility supplier industry, the wave of acquisitions, mergers and partnerships. The aim is to secure strong market positions in a globalising fleet and mobility environment in which Europe will remain highly important, but has to look beyond its borders to stay on top.
With that in mind, I hereby extend an invitation to you for the 2018 Global Fleet Conference in Rome. There, industry leaders will discuss the important topics in global and regional fleet and mobility management today and share their analysis with you.