2019 UK FLEET BAROMETER...2019 UK FLEET BAROMETER ARVAL MOBILITY OBSERVATORY | JUNE 2019 2 CONTENTS FLEET PROFILE CORPORATE MOBILITY FLEET CHALLENGES FOR …

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2019 UK FLEET BAROMETER

ARVAL MOBILITY OBSERVATORY | JUNE 2019 2

CONTENTS FLEET PROFILE

CORPORATE MOBILITY

FLEET CHALLENGES FOR THE NEXT FIVE YEARS

FUEL MIX

DIESEL DEBATE / WLTP / CLEAN AIR ZONES

EMPLOYEE MOBILITY

GOVERNMENT FOCUS

ROAD SAFETY

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ARVAL MOBILITY OBSERVATORYArval Mobility Observatory is the new name for CVO (Corporate Vehicle Observatory) - our specialist research channel that is now widely recognised as one of the most informative pieces of work carried out in the company vehicle and mobility sector. The research conducted this year asked a wide range of questions and dug deep into the latest vehicle trends in the UK and across Europe.

We carried out over 3,900 in-depth interviews with key decision makers in businesses across a wide range of sectors. The people we spoke to were responsible for company vehicles, ranging from just one company vehicle to fleets in the thousands, giving us a broad insight into what is happening on the ground in the industry.

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3 ARVAL MOBILITY OBSERVATORY | JUNE 2019

METHODOLOGY

DATA COLLECTION METHOD

TARGET SAMPLE DURATION OF INTERVIEW

CATI System(Computer Assisted

Telephone Interviewing)

Fleet managers in companies across a range

of industries using at least 1 corporate vehicle

3,930 interviews including 3,613 through Europe

317 out of Europe

10 minutes on average

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12

15

19

29

33

37

PICTOGRAMS


COMPANY SIZE

Less than 10 employees

10 to 99 employees

100 to 999 employees

1,000 + employees


1 FLEET PROFILE

NUMBER OF VEHICLES IN FLEET


TOTAL

58%

27%

10%

5%

98%

64%

38%

2% 2%

34%

50%

12%

0 to 10 vehicles 10 to 99 vehicles 100 to 499 vehicles 500+ vehicles

29%

33%

10%

28%


2 CORPORATE MOBILITY

CORPORATE MOBILITY SOLUTIONS


There is a lot of discussion in corporate circles about mobility solutions at the moment and our research shows that interest is high. As a provider, we believe that there is considerable potential for these products. What is clear above all, though, is that the company car looks set to remain the core transport method for the foreseeable future. While decision makers and employees in organisations are interested in mobility solutions, it appears that the vast majority see them as supplementing or being a partial alternative to the traditional fleet. We believe the reasons for this are simple. Some of them are revealed in our research by showing how much employees value having a company car and the benefits it brings. The other is that when a typical multi-stop journey is undertaken, a car is the only practical option. A mixed provision model is one that we have been saying for some time is the most likely to develop in the majority of businesses, where a range of mobility solutions are used alongside company cars with employees using the most appropriate form of transport for each journey. Our belief is that, over the next few years, as more and more fleet managers become mobility managers, one of the most interesting developments will be the process that businesses undergo in learning how to use mobility options in the most effective manner.

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“Shaun Sadlier, Head of Arval Mobility Observatory in the UK

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PERCENTAGE OF COMPANIES READY TO GIVE UP ALL OR SOME OF THEIR COMPANY CARS FOR ALTERNATIVE MOBILITY SOLUTIONS


TOTAL

CAR SHARING

RIDE SHARING

MOBILITY BUDGET

PRIVATE LEASE

MID-TERM RENTAL

7%

9%

8%

11%

7%

3%

8%

6%

8%

2%

7%

9%

9%

7%

4%

8%

10%

7%

10%

6%

14%

10%

13%

20%

19%


WHICH MOBILITY SOLUTIONS ARE COMPANIES CONSIDERING IN THE NEXT THREE YEARS

TOTAL

CAR SHARING

RIDE SHARING

MOBILITY BUDGET

PRIVATE LEASE

MID-TERM RENTAL

31%

45%

21%

23%

22%

10%

22%

13%

15%

11%

24%

51%

22%

14%

21%

41%

55%

23%

20%

21%

57%

65%

32%

49%

45%

10 11 ARVAL MOBILITY OBSERVATORY | JUNE 2019

REASONS DRIVERS STAY WITH A COMPANY CAR INSTEAD OF ALTERNATIVE MOBILITY SOLUTION

TOTAL

32%

10%

14%

32% 37% 33%

22%

11%

18%

Not having to finance their own vehicle

No risk of ownership: e.g. residual value

Ease of motoring; all services provided by the company

11%

28%

10%

8%

16%

8%

16%

9%

11%

13%

14%

6%

14%

4%

21%

21%

Delivery of a new car every 3 or 4 years Other

3 FLEET CHALLENGES FOR THE NEXT FIVE YEARS



FLEET CHALLENGES FOR NEXT FIVE YEARS

The breadth of issues mentioned in response to this question shows that fleet and mobility managers are facing some very difficult challenges over the next few years.

Probably the most interesting aspect is that the majority of these issues are linked to external regulatory and policy factors that have an impact on fleets, rather than being practical issues.

Some of these, such as Clean Air Zones, are generally supported by fleets who are well aware of the need to make their transport activities as environmentally responsible as possible. However, the fact that 19% of fleets believe Government policy is unclear and that large numbers mention both vehicle and personal taxation is certainly frustrating.

Shaun added that he was unsurprised that the issue of road infrastructure causing congestion had topped the list of challenges.

When we talk to fleet and mobility managers, there is a general level of concern, not really over the building of new roads, although these are needed in some places, but at the condition of existing ones and the impression that they are not being used to their maximum efficiency.

He also said that fleet recognition of the challenges arising from the switch to wider fuel diversity, especially widespread use of electric vehicles (EV), was understandable.

Cars and vans have been almost exclusively powered by combustion engines for more than a century and a fundamental shift to having a relatively high EV penetration into fleets definitely represents a change.

However, our experience to date is that many of the factors that are perceived as obstacles can be overcome relatively easily with the right approach, and we are supporting many businesses through this transition both in an advisory and practical manner.

Generally, fleets that have made the switch to EVs are very positive about the experience.

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MAIN CHALLENGES EXPECTED IN TERMS OF FLEET MANAGEMENT IN NEXT FIVE YEARS

LACK OF ROAD INFRASTRUCTURE CAUSING INCREASED CONGESTION

INCREASED VEHICLE TAXATION

UNCLEAR GOVERNMENT POLICY TOWARDS TRANSPORT

IMPLEMENTATION OF ALTERNATIVE FUEL POLICIES

INCREASED DRIVER PERSONAL TAXATION

INTRODUCTION OF MORE CLEAN AIR ZONES

49%

30%

19%

19%

16%

16%


4 FUEL MIX


FUEL MIX

The fact that larger organisations are leading the way in the adoption of newer fuel options is unsurprising for a number of reasons.

Many have corporate social responsibility targets to meet and a more structured approach to their fleet, so tend to incorporate new developments into their fleet policies as a matter of course in a methodical fashion.

Our view is that this is happening simply because these businesses have fewer resources available to take time to understand the advantages of EVs, for example.

Bearing in mind that a substantial part of the company car parc is operated by fleets at the smaller end of the spectrum, it perhaps indicates that special efforts need to be made across the fleet sector to educate them about the benefits of these newer vehicles.

Shaun added that it was pleasing to see that UK fleets were playing such an important part in the adoption of hybrids and electric vehicles across Europe.

The UK fleet sector is probably the most developed in Europe and we do tend to be a pioneer in new areas. The shift to a more diverse energy mix is an important development and the work that is being done here is often subsequently being adopted by Arval in other countries.

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“ Shaun Sadlier, Head of Arval Mobility Observatory in the UK


WHICH ALTERNATIVE FUELS HAVE COMPANIES IMPLEMENTED OR PLAN TO DO SO IN THE NEXT THREE YEARS

TOTAL

AT LEAST ONE TECHNOLOGY

HYBRID

PLUG-INHYBRID

ELECTRICVEHICLE

34%

25%

22%

16%

5% 22%

19%

13%

11%

46%

26%

30%

20%

78%

68%

54%

39%

3%

3%

3%


COMPANIES THAT HAVE IMPLEMENTED ALTERNATIVE FUEL VEHICLES OR PLAN TO DO SO IN THE NEXT THREE YEARS

21%

12 3

44%34% 28%

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5

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7

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9

10

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12

13

23%

23%

22%

20%

20%

19%

8%

6%

4%

4%


5 DIESEL DEBATE / WLTP / CLEAN AIR ZONES

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THE DIESEL DEBATE

RDE2 diesels are starting to become available and some of them are comparable with petrol on NOX emissions while also offering better CO2 output and fuel economy.

However, it appears that diesel has become so inherently unpopular as the result of recent emissions controversies that there will be no large scale resurgence in its popularity, despite this development.

Against this backdrop, it is important to note that around half of fleets are planning to continue to operate diesel cars, recognising their suitability in certain situations.

Shaun added that it was also noteworthy that businesses planning to replace their diesel vehicles are more often intending to switch to alternative fuels rather than petrol.

Roughly six times as many fleets will be replacing their diesels with hybrids or EVs as with petrol, and this should give a strong push to alternative fuel adoption over the next few years. Certainly, we see many fleets swapping their diesels for hybrids.

Our position is very much that the fleet of the future will use a diverse range of fuels, with the emphasis being placed on matching the needs of the driver to the right vehicle, and we are doing a lot of work in helping fleets start to make these decisions.

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IF CAR MAKERS PRODUCED DIESEL VEHICLES WITH NOX AND FINE PARTICLE EMISSIONS EQUAL TO PETROL CARS, WHAT WOULD COMPANIES DO?DON’T KNOW

CONTINUE THEIR POLICY OF NOT BUYING DIESEL

INCREASE THEIR SHARE OF DIESEL CARS

CONTINUE TO BUY DIESEL CARS

CONTINUE TO REDUCE THE SHARE OF DIESEL CARS

44%

29%

16%

5%

7%

WITH PETROL

WITH ALTERNATIVE FUELS

WON’T CHANGE DIESEL SHARE

CONTINUE NOT TO BUY DIESEL

DON’T KNOW

7%

16%

4%

49%

22%

In the case of the question above, how would your company replace diesel cars?


WLTP IMPACT

Now that WLTP figures are starting to become the norm across fleets, we are seeing how businesses are handling their impact in a real world manner.

The fact is that while the majority of fleets are not planning changes, a significant minority will be redrawing their choice lists and we are already supporting quite a large number of businesses through this process.

The calculations and the knowledge needed to do this successfully are quite involved and even some large organisations with good internal fleet resources need to look to external consultants to be able to handle the challenge successfully.

Shaun added that it was unsurprising the research showed that larger employers were making more changes than their smaller counterparts as a result of WLTP.

These are organisations that, because of their size, will tend to have a much more structured approach to their company car operations and the impact of WLTP will be clearer, especially when it comes to drawing up choice lists.

The ideal outcome for fleets working to accommodate WLTP is to be able to offer a comparable model to each employee but without any kind of taxation penalty. Looking at options with lower emissions, especially alternative fuels, is the obvious route. Certainly, several customers with whom we have been working are now introducing vehicles that perform better under the new test, including hybrids and EVs.

Our general finding is that, in most cases, new choice lists can be created that resolve most of the issues raised by the switch to WLTP and it is helping some fleets move more quickly towards the wider fuel diversity we expect to see develop over the next few years.

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WILL THE WLTP TEST INTRODUCTION IMPACT ON YOUR FLEET POLICY

TOTAL

ALREADY OR EXPECTED

YES, ALREADY 20% 14% 11% 18% 42%

47% 39% 41% 49% 61%

ALREADY OR EXPECTED

YES, ALREADY 21% 13% 12% 22% 40%

47% 36% 42% 51% 67%

ARVAL MOBILITY OBSERVATORY | JUNE 2019 24 25

CHANGES ANTICIPATED BY COMPANIES DUE TO WLTP TEST

TOTAL

LOWER THE LEVEL OR CATEGORY OF CARS

CHOOSE CARS WITH LOWER EMISSIONS

CHOOSE MODELS WITH LOWER FINANCIAL IMPACT

CHOOSE ALTERNATIVE FUELS

DO NOT EXPECT TO CHANGE CAR LEVEL

4%

12%

6%

7%

85%

2%

8%

4%

2%

4%

6%

1%

1%

2%

15%

7%

14%

79%

11%

19%

11%

13%

78%89% 94%


CHANGES ANTICIPATED IN CAR POLICY IN CO2 EMISSIONS LEVELS DUE TO WLTP TEST INTRODUCTION

TOTAL

YES, MAXIMUM CO2 LEVELS WILL INCREASE

10% 7% 6% 7% 22%


CLEAN AIR ZONES AND TOLL ROADS

There has been quite a lot of debate around the likely impact of Clean Air Zones and the Ultra Low Emissions Zone, with some criticism that they don’t go far enough in enforcing low emissions standards.

However, this research indicates that they are likely to change the behaviour of a relatively large number of businesses, whether that means operating greener vehicles or changing their transport options within the zone.

He added that the attitudes that fleets have revealed towards toll roads were also interesting.

This shows that more than half of businesses questioned would actively pay for tolls, presumably in the expectation that they are reasonably priced and will help to make their transport faster and more efficient.

For us, this is further evidence of the concern that employers have about the impact of congestion on their operations, something that is seen elsewhere in our research.

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STRATEGY EXPECTED BECAUSE OF THE INTRODUCTION OF LOW EMISSION OR CLEAN AIR ZONES

TOTAL

PERCENTAGE OF COMPANIES EXPECTING TO BE IMPACTED

REPLACE VEHICLES WITH THOSE THAT MEET THE NEW ZONE’S STANDARD

MAKE NO CHANGES AND ACCEPT THE IMPACT ON FLEET OPERATIONS INCLUDING COSTS

FIND OTHER TYPES OF TRANSPORTATION TO ALLOW CONTINUATION OF BUSINESS WITHIN THESE ZONES

OTHER

20%

13%

19%

8%

22%

10%

25%

13%

15%

17%

34% 35% 30% 32% 39%

12% 10% 13% 9%14%

3% 1% 2% 3%4%


EXPECTED IMPACT FROM THE INTRODUCTION OF ADDITIONAL TOLL ROADS

TOTAL

WILL ENCOURAGE DRIVERS TO USE TOLLS AND RECLAIM THEM AS AN EXPENSE

WILL CONSIDER THAT IT IS UP TO DRIVERS TO USE THEM AT THEIR OWN COST

51%

26%

54%

27%

45%

30%

45%

35%

59%

18%


6 EMPLOYEE MOBILITY

ARVAL MOBILITY OBSERVATORY | JUNE 2019 30 31

EMPLOYEE MOBILITY

This is an area where we have seen substantial growth in recent years, especially when it comes to personal contract hire, affinity and salary sacrifice schemes.

Increasingly, businesses are seeing car leasing schemes as an attractive employee benefit, that offer many of the advantages of company car schemes to a wider range of the people working for them.

This is happening first in larger corporates, as you would expect, where many major employers are introducing affinity schemes that provide a fully funded, maintained and insured car for a single monthly payment. It’s an interesting development.

Shaun said that the trend was probably more than offsetting slight reductions in the number of company cars being offered by employers.

We have been saying for some time that while there has been a marginal fall in the number of company cars generally, the overall fleet leased to employees in the UK has increased.

As our figures show, even among large employers, penetration for this type of initiative is still only around the 30% mark, so we expect this to be a major area of growth for leasing companies in the next few years.

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PROPORTION OF COMPANIES OFFERING NON-COMPANY CAR DRIVERS SOLUTIONS FOR FINANCING THEIR PERSONAL CARS

TOTAL

12% 2% 6% 16% 29%

33ARVAL MOBILITY OBSERVATORY | JUNE 2019 32

SOLUTIONS PROPOSED TO NON-COMPANY CAR DRIVER EMPLOYEES IN ORDER TO FINANCE THEIR PERSONAL CARS

TOTAL

CASH ALLOWANCE

SALARY SACRIFICE

PERSONAL CONTRACT HIRE

AFFINITY SCHEME

PERSONAL CONTRACT PURCHASE

NO SOLUTION OFFERED

7%

6%

2%

2%

88%

2%

0%

0%

0%

1%

6%

0%

0%

11%

2%

1%

1%

84%

14%

20%

7%

6%

71%98% 94%

1% 0% 0% 1% 13%


7 GOVERNMENT FOCUS


GOVERNMENT FOCUS

The striking aspect about the areas highlighted by fleet and mobility managers is that they are all highly practical issues that affect the running of business transport on a day-to-day basis.

The condition of roads and the problem of congestion are a concern because they affect the core efficiency of company transport. Businesses want journeys to be predictable and safe, and poor roads and large volumes of traffic have a negative effect on this aim.

It is also striking the extent to which there is a desire to see Government make the adoption of EVs and hydrogen vehicles easier. There is clearly growing enthusiasm among businesses for these cars and vans, but also an awareness of the need to make their cost and the level of infrastructure support more appealing.

Linked to the adoption of zero-emissions fuels is the belief that more should be being done to tackle road transport-based pollution. Our experience is that businesses are almost always supportive of Government moves to make improvements in this area.

Finally, some people may think it surprising that fleet and mobility managers want to see better public transport but the strategic developments we are seeing in this area show that businesses see the future of travel as being one where cars and vans are used alongside a range of other options. Better trains, trams and buses should form a key part of this mix if possible.

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AREAS THAT GOVERNMENT SHOULD CONCENTRATE ON ACCORDING TO FLEET AND MOBILITY MANAGERS

IMPROVING ROADS

TACKLING ROAD CONGESTION

INCENTIVISING COMPANIES TO ADOPT EV AND HYDROGEN VEHICLES

IMPROVING PUBLIC TRANSPORT

REDUCING POLLUTION CAUSED BY TRANSPORT

54%

47%

30%

22%

18%



AREAS THAT GOVERNMENT SHOULD CONCENTRATE ON ACCORDING TO FLEET AND MOBILITY MANAGERS

TOTAL

IMPROVING ROADS

IMPROVING ROAD CONGESTION

INCENTIVISING COMPANIES TO USE ALTERNATIVE FUEL TYPES

IMPROVING PUBLIC TRANSPORT

REDUCING POLLUTION CAUSED BY TRANSPORT

OTHER

47%

30%

22%

3%

44%

26%

29%

50%

27%

20%

52%

36%

13%

0%

41%

34%

27%

8%2% 3%

18% 14% 22% 17% 21%

54% 55% 57% 56% 44%


8 ROAD SAFETY


ROAD SAFETY

Advanced Driving Assistance Systems (ADAS) are becoming very common on company cars but they are something of an issue for fleets in that there is very little reliable information available about which work best in terms of actually helping drivers avoid accidents.

What this research represents is therefore really a list of which devices fleet and mobility managers believe will be most useful in real world conditions – and what it indicates they want more than anything is to avoid collisions with other vehicles and pedestrians.

Our view is that ADAS technology works best in promoting safety when used alongside telematics devices that allow driver behaviour to be highlighted, helping employees to make improvements both by themselves and through options such as training.

Shaun added that it was concerning to see some suggestion that drivers working for smaller employers were experiencing lower levels of risk assessment than larger ones.

This is almost certainly an issue of resources. A large organisation will tend to have company-wide risk assessment arrangements in place that cover all their activities in depth and the fleet will benefit from this professionalism.

What is needed are more services and practical help to enable all smaller employers to raise their safety to comparable standards to their larger counterparts and this is a task in which the entire fleet industry needs to play a part.

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MOST USEFUL SYSTEMS TO IMPROVE DRIVER SAFETY

COLLISION AVOIDANCE OR WARNING SYSTEMS

AUTOMATIC EMERGENCY OR BRAKING SYSTEMS

PEDESTRIAN DETECTION SYSTEM

LANE DEPARTURE WARNING SYSTEM

DRIVER FATIGUE WARNING SYSTEM

AUTOMATIC PARKING SYSTEMS

ADAPTIVE CRUISE CONTROL

49%

46%

38%

30%

30%

38

20%

15%



MEASURES TAKEN BY COMPANIES IN ORDER TO MINIMISE ROAD RISK

TOTAL

RISK ASSESSMENT

COMMUNICATION PROGRAMME

ON-ROAD TRAINING

CLASSROOM TRAINING

61%

35%

33%

26%

32%

12%

11%

8%

62%

35%

79%

47%

43%

37%

78%

68%

54%

39%

26%

32%

Source: AMO Research 2019https://mobility-observatory.arval.com/

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2019 UK FLEET BAROMETER...2019 UK FLEET BAROMETER ARVAL MOBILITY OBSERVATORY | JUNE 2019 2 CONTENTS FLEET PROFILE CORPORATE MOBILITY FLEET CHALLENGES FOR …