That’s the prediction from Leasedrive Group, which has issued its key fleet trends for next year.
Commercial director Roddy Graham said: ‘2014 will see the leasing sector bounce back with companies enjoying better profitability. Further consolidation in the sector is inevitable, especially as interested parties track a sector in rude health. Cost control continues to be the number one priority for fleets so the pressure remains on service providers to deliver further added value without compromising service. Pressure will mount for better accountability, be it on official fuel figures or the amount collected in motoring taxes being reinvested in the UK road network.’
Key Fleet Trends for 2014:
‘As always, the No. 1 prediction is that there will be more industry consolidation. 2013 saw modest growth in the Fleet News FN50 with 36 companies increasing their risk fleet size and only two new companies entering the table. The top five registered the biggest fleet growth of 5%. As profits rise, and the wider economy continues to improve, certain leasing companies could become targets and the sector will undoubtedly attract new investors. Interestingly, the biggest changes were in leadership with six of the top ten FN50 seeing new men behind the wheel, indicating possibilities for changes in direction.’
‘A potential hurdle for some leasing companies is how well they have forecast future RVs. Following a strong performance in 2013, the general consensus is that RVs will retreat a little next year. But as we all know, the profitability of leasing companies is largely dictated by how well they forecast RVs. Done well, the profit curve revs up, done badly the same curve soon plunges into the red.’
‘I don’t believe we will see any lifting of the foot off the cost-saving pedal for some years yet. Fleet operators will continue to make lowering costs their top priority, conducting a careful balancing act between achieving lower costs while not compromising customer service satisfaction. In the pending war for attracting top talent, the last thing employers want is to upset their key employees. After all, the company car remains a big emotive issue. With fuel costs closely nudging depreciation as the highest single fleet cost, fuel management in its different guises is becoming ever more important. Influencing driver behaviour is another major way of cutting costs, not only on fuel but SMR, accident, mileage and wear and tear. Whole life costs are however surprisingly still a neglected area by many and a more sophisticated approach is required to gain a true picture on costs. Total cost transparency by fleet management providers is also essential as well as world class fleet management systems, integrated solutions and top quality people.’
‘With fleets already focused on fuel costs, pressure will mount for more reliable fuel consumption figures. Quoted mpg figures rarely reflect real world fuel consumption figures, as fuel economy figures are established under controlled laboratory conditions, hardly reflective of real life driving situations. The European regulations governing these tests date back to the 70s and, while updated since, are unrealistic. They are short in length, involve long periods of idling, slow acceleration and low engine loads. Recent research by the International Council on Clean Transportation found that on average real world fuel consumption figures for new cars was 21% below those quoted by vehicle manufacturers. As a guide, the AA recommends assuming a car will do 25% less than that officially claimed by the vehicle manufacturer. So a campaign is underway to adopt a new global test, the World Light Duty Test Procedure which on the driving cycle alone sees fuel consumption figures on average 5% higher. If adopted by the EU, it could be applied to new type approvals from 2016/17.’
‘Business insight firm, International Data Corporation, has predicted that by 2015, 37% of the world’s entire workforce will work remotely using mobile technology. The implications for fleet are all too clear, especially given the drive to lower costs, the greater attention paid to corporate social responsibility and the increased use of improved conference technology. With business mileage already dropping, expect business mileage to go just one way, downhill.’
‘Currently, more than £40bn is raised by the Treasury through motoring taxation and yet only around 22% of that money is invested in new roads and maintaining existing ones. The latest RAC Report on Motoring highlighted that there is new urgency in examining how drivers are taxed, especially given that in the face of rising fuel prices we are driving fewer miles in our more fuel efficient cars. The RAC is advocating that a greater proportion of the taxes raised from motoring are ring-fenced for roads. Meanwhile, pressure is mounting on Government to abolish the outdated tax disc and recoup the revenue directly through fuel duty.’
‘I mentioned that influencing driver behaviour can have a significant impact on fleet costs. More far sighted use of available telematics technology can not only ensure that the vehicle asset is protected but that the all-important employee asset is too. The amount of big data now available is incredible and it is a matter of properly making use of that data, both from a legislative standpoint and from an intelligence viewpoint. Telematics is now so sophisticated, it’s not so much a question of what knowledge we need to collect but how do we correctly analyse it for the common good of company and driver. Predicting driver behaviour to head off negative behaviour is far better and more useful than correcting it once it has taken place. Predictive analytics will therefore be a key tool in the telematics armoury.’
He concluded: 'As more organisations focus on their core activities, there will be more demand for fleet management. Medium and large-sized organisations will wish to leave fleet management to the experts and turn to fleet outsourcing specialists offering a wide range of services, from funding to salary sacrifice, and technological innovations. However, closer partnerships will be essential to maximising benefits and clearer pricing transparency will become more prevalent.’
