A new decade and a watershed year for fleet and mobility decision-makers as the established near 50-year-old employee remuneration package ‘benefit’ of a company car is consigned to history.
Align that with the emergence of corporate mobility management, an essential and business-critical dimension that goes beyond the provision of a car and extends to every mode of transport available, and the creation of a new senior job function, mobility manager, and 2020 is the year for the long established company car rule book to ripped-up.
That’s the view of Tony Donnelly, chief executive of Goodwood Corporate Mobility, who said: “While the company vehicle fleet, and the expertise required to manage one, are far from obsolete, progressive businesses must build their corporate mobility requirements around a total business travel model.
“That demands a very different skill set than was previously the case from those tasked with keeping their people mobile.
“There is an increasing trend for progressive businesses to be seen to encourage and drive change in the way their people take responsibility for their method of travel – be it domestically or globally in a way that enhances a business and an individual’s environmental credentials.
“That requires a very different corporate mindset from both an employer and their chosen fleet service partner.
“Additionally, today’s executives are more demanding of their employers in as much as they want a greater say in the way they are provided with the means to travel on business. Hence the rise of Mobility-as-a-Service.”
Therefore, in 2020 fleet decision-makers and those with travel management responsibility must focus on:
- Vehicle ‘usership’ and not ‘ownership’
- A vehicle ‘on-demand’ requirement, particularly in urban areas as new workplace parking levies, diesel parking surcharges and Clean Air Zones are introduced
- Generation Y – those born in the 1980s and 1990s – but without the same attachment to a company car as yesteryear employees as they assume management positions.
- Employees increasingly demanding more involvement in planning their own travel thereby allowing a greater degree of choice with improved integration of business and personal responsibilities thus boosting their employment satisfaction
- The attractiveness of giving employees the responsibility and benefit of travel planning and control of their own mobility budget, while retaining oversight of the transport choices provided, which makes these ‘grown-up’ responsibilities a statement of modernity and trust.
Donnelly said: “What’s abundantly clear to me is that whatever went before is now consigned to the fleet industry’s archives and meriting reference, but not guidance.
“The fleet rule-book borne out of the creation of the company car as a result of the three-day week of the mid-1970s is not fit-for-purpose in an area where technology is forcing change at unprecedented rates and the ‘Amazon effect’ where service and fulfilment are ‘on-demand’ is a must have.”
However, he warned: “Fleet progress must be tempered with management, control and compliance inside a structure that focuses on cost and supports a business that is required to be both modern and responsible. In an old-fashioned way, it is called fleet management but in today’s business world it is structured corporate mobility management.”
Donnelly added: “The measurement dynamic when a business looks at combining the alternatives available – vehicle usership and not ownership, plug-in and not internal combustion engine cars except modern diesels for high mileage drivers – must include the ability of a service provider to meet clients’ needs.
Corporate mobility partners
“That means employers must partner with the emerging breed of corporate mobility providers that are not stuck in the slow lane of servicing their own vested interests, but in the dynamic fast lane of delivering appropriate vehicles on-demand, while minimising employees’ exposure to benefit-in-kind tax and all at a price that reduces business costs.
“Structured rental is the future and that future is now.”
Two factors that will drive vehicle ‘usership’ instead of ‘ownership’ and thus rental over leasing are, according to Donnelly:
- Notwithstanding a 144% rise in registrations of battery electric cars in the UK in 2019, according to Society of Motor Manufacturers and Traders’ data, model choice remains limited and long lead times are further hampering demand. Consequently, while drivers will beat a path to fleet decision-makers’ doors to have a zero emission vehicle as their next company car due to hugely advantageous benefit-in-kind tax rates, marketplace reality mean their hopes will often be quashed, at least in the near-future.
- For progressive business the rapid advance in technology, coupled with a rising number of local authorities seeking to introduce new charges that aim to curtail use of all but the very cleanest vehicles, the increasing difficulty of parking in urban areas and a workforce that does not have the same attachment to the company car means that signing a four-year vehicle leasing contract is not viable.
He said: “If employees cannot obtain a 100% zero emission car and save tax, why should they be ‘forced’ into taking delivery of a petrol or diesel car by factors they have no influence over?
“Similarly, why would a business commit to a four-year lease when technology and legislation is changing so rapidly? It makes no sense.”
However, that outlook must be balanced against a requirement that, in some businesses, point to a future where diesel will continue to rule despite UK registrations being down almost 22% in 2019.
Donnelly said: “The arguments against the internal combustion engine, and specifically diesel, are being largely driven by emotion linked to environmental challenges. They are not being influenced by practical common sense and economic considerations as diesel remains the fuel of choice for those who, through necessity, drive long distances on a regular basis.”
A better way
“There is a better way for fleets to operate that will deliver numerous advantages at the start of the 2020s. High mileage, essential users must have mobility and thus vehicles ‘on-tap’.
“But for all other company car drivers, traffic congestion and the numerous other factors mentioned above mean that an over-reliance on a mode of convenience and not necessity must come to an end.
“Ultimately, in answer to the question ‘do businesses need to own vehicles or commit to long-term leases any longer’, the answer must be no.”