However, a good policy can be set up by measuring TCO. The Total Cost of Ownership, the costs that a company car actually costs the company over its useful life. This is measured as indirect and indirect costs.

TCO Types

There are various concepts of TCO in the market. TCO1, TCO2, commercial TCO, etc… the most correct approach to a TCO is the definition of the TCO included in the Act of 19 March 2019 regarding the statutory mobility budget (TCO2 plus additional mobility costs).

This TCO (TCO2) mainly consists of 3 (car) building blocks, possibly supplemented by a fourth to arrive at the mobility budget.

The first building block

This includes the depreciation costs, financing costs, maintenance costs, tires, insurance, etc. of the company car. If the cars are not leased, a depreciation of 20% per year must be taken into account.

The second building block

This is the energy cost of the car. This is influenced by the annual kilometres driven, the consumption of the car and the fuel cost in eur/litre or eur/kwh.

The third building block

This includes the tax cost of the company car. It is not uncommon for it to be found in other parts of the income statement.

It includes the CO2 contribution that is influenced by the propulsion of the car and the CO2 emissions. Furthermore, this also includes the additional tax cost due to the effect of the disallowed expenses: the car expenses that may be deductible to a limited extent and the tax effect of the employer’s part of the benefit in kind, being 40% of the BIK if a fuel or charging card is provided.

This effect can be seen as follows:

Example

Suppose 100 revenues versus 100 costs means accounting result 0 and therefore no (corporate) taxes to pay. Suppose that these costs are only 50% tax deductible, then, although accounting result is 0, the tax result is 50. For example, 25% corporation tax is due on this. Consequently, the cost to the company is 100 plus 12.5 taxes.

The leasing companies often use the commercial TCO that also takes into account the tax effect of the 100 costs, i.e. if the 100 costs were not there, 25 more tax had to be paid, so the commercial TCO is 112.5 minus 25, so still 87.5.

We describe the fourth building block when we discuss the mobility budget.

TCO as a measuring tool

If you map out the TCO of the fleet every year, you as CFO will know which direction the costs are going and which cost (or TCO) components deserve your special attention.

To calculate the TCO, you need data. Data from the leasing company, lease costs, insurance costs, exceptional costs, the CO2 emissions of the cars, type of drive, data related to actual kilometres driven, fuel costs, consumption of the charging sessions, shifts in the fleet, etc.

Once you know what data is needed, but more importantly what data you can access with sufficiently high quality, you can start making your “baseline calculation”. If some data is not available or does not have the necessary quality, assumptions can be used. An example of this is the actual fuel consumption, which can be calculated on the basis of the actual kilometres and the CO2 emissions.

At regular intervals, e.g. semi-annually or annually, you can request new data and map out a trend in the TCO components. This allows you to monitor your fleet and the related costs and to make adjustments where necessary.

TCO as a basis for change

Change needs to be measured. TCO serves as a measuring instrument to measure results. However, the TCO also serves as a basis for implementing changes.

Electrification

If you want to compare power trains, a TCO (TCO2) approach is recommended, including tax costs. After all, it is precisely the tax building block and, to a lesser extent, the energy building block that, as a subsidizing effect, can compensate for the (still) more expensive purchase cost, possibly translated into a more expensive lease cost, of an electric car. 

In most cases, the TCO for an equivalent electric car is at least equal to or less than the TCO of an equivalent driving diesel car. Only in the small car segment can this sometimes be a challenge because the battery cost weighs heavily in the relative cost of the car.

This trend in which the TCO of an electric car is cheaper than that of its petrol, diesel or even plug-in hybrid equivalent will continue due to a more expensive taxation of non-zero-emission (NZE) cars in the coming years with 0% tax after from 2026, a lower residual value of these NZE cars and increasingly cheaper electric cars. Electrification is a must!

Mobility budget– the ‘Fourth Block’

If you want to switch to a mobility budget, you must by definition and legally use the TCO as a basis. This includes the three building blocks, linked to the company car, as discussed earlier, and a fourth building block of costs linked to other costs of the car or mobility that the employer (additionally) takes care of.

Examples of this are bicycle allowances or allowances for the use of public transport if a company car user can claim these on top of his company car. It also concerns the deductible or end of lease cost, damages, costs of (external) fleet management, etc., that the employer takes charge of in the context of the use of the company car. These costs may be added to the TCO as the basis for the mobility budget.

After all, the mobility budget is equal to the TCO (building block 1-4) of the company car that the employee could choose and that the employee exchanges for a mobility budget. In theory, this is an individual approach in which at the beginning of the year following the actual costs of the mobility used through the spending of the mobility budget must be compared to this mobility budget. If there is a surplus, the employee can receive the difference in favourably taxed (38.07%) cash. If there is a shortage, the employee must pay it back.

It is also allowed that the mobility budget per car policy category is based on an average TCO of the cars in that category or on the basis of the reference cars offered in that category. The advantage is that these are averages and in principle, company-wise, should reflect the total TCO or mobility budget of the company. SO in principle one can argue that no corrections have to be made annually (actual vs budget). Which, in principle, can mean significant savings in terms of administration.

Of course, in addition to a correct introduction of the mobility budget, one must also meet the set formal requirements, mobility policy, application by employee, mobility contract, description of the method used and specific mentioned exclusions of any other compensation, e.g. collective transport, etc. This requires the necessary attention.

TCO trends

If we take a general overview of the above exercise for the period 2021-2023, we can draw a number of conclusions:

Leasing costs

Leasing costs have risen considerably over the past year; Purchase prices of cars have risen, fleet discounts have generally decreased, residual values for certain drives have decreased, inflation for maintenance costs and higher insurance costs. Increases of 15 to 20% are no exception.

As a result, within the same car policy budget, an employee could no longer order the same car at the end of 2022 than the employees, within the same car policy category, a year ago. This can lead to dissatisfaction…. Consultation with your HR department is recommended.

Energy costs

Energy costs have also risen significantly, mainly due to the war in Ukraine. On the one hand, we see a downward trend in the number of kilometres driven due to increased working from home compared to the period before Corona. This trend seems to have levelled out and seems to be reversing some of the fact that employees are going back to the office more (social contact, heating costs, etc…). On the other hand, the price of fuel and electricity has risen.

All of this leads to an increase in energy costs. Presumably, your company will take the bots with the bump here. Perhaps further electrification of the vehicle fleet or the introduction of mobility solutions can offer solace. 

Tax costs

The tax costs mainly consist of 3 components: the CO2 contribution, the tax effect of the disallowed expenses, the tax effect of the employer’s part of the benefit in kind if a fuel and/or charging card is provided.

These costs have also increased at the beginning of 2023: the indexation of the CO2 contribution and the limited tax deductibility of fossil fuel costs to 50% for plug-in hybrid vehicles. For non-zero emission (NZE) vehicles, these tax costs for cars ordered from 1 July 2023 have increased significantly.

From 1 July 2023, the tax deduction is limited over time for NZE cars ordered from 1 July 2023. Another 100% in 2023 and 2024, a maximum of 75% in 2025, 50% in 2026, 25% in 2027 and 0% in 2028. This 25% less tax deduction can quickly have an effect between 50 and 100 euros per month, depending on the size of the car and its lease price.

The CO2 contribution is also multiplied by a factor of 2.25 for NZE cars ordered from 1 July 2023. NZE cars will be ordered from 1 January 2025 by a factor of 2.75, from 2026 a factor of 4 and from 2027 by a factor of 5.5. Without taking into account the annual indexation, this means at least an increase from EUR 28.17 per month to +/- EUR 64 per month in 2024 and 2025 for a plug-in hybrid vehicle.

The tax effect of the employer’s part of the benefit in kind increased slightly due to a further decrease in the reference CO2 emissions and the minimum benefit in kind (EUR 1540 moving to 1600 for 2024). This has a rather marginal effect (e.g. 2.9 eur per month for electric vehicles).

TCO has risen considerably… What should I do?

It is important to follow these TCO evolution(s) and to perform an internal benchmark. What is the increase in the lease price of the most popular models within a car policy category? This ratio can then be used to discuss an acceptable increase in the car policy budget internally and to justify it in terms of budget.

At a time when attracting the right people can be a challenge, it seems logical not to offer smaller cars (or less equipped ones).

Alternatively, one can switch to electric cars and take a closer look at the lease parameters, term and (car policy) mileage. One can also decide to work with a car list in order to monitor the TCO “behind the scenes” and keep it under control or tight.

Mobility solutions and the legal mobility budget are the ultimate means of combining flexibility and budget control. Flexibility because by definition it is individually filled in by the employee on whom the mobility budget is spent (or not spent) and control since one has a budget that must be compared with the actual spent of mobility costs at the end of the year. In other words, transparent and budgeted costs in advance.

Supplier strategy, process optimisation and data transparency are further buzz words for fleet in 2024.

Conclusion

As a CFO, you cannot ignore the concept of TCO!

TCO and insights into it, will give you the opportunity to make and substantiate changes. It will allow you to make correct comparisons and react correctly to cost and market trends.

Consequently, TCO is an unavoidable concept for a good mobility policy.

Measuring is knowing!

Call us and lets talk.

Read more on TCO

The post TCO as a work tool for the CFO appeared first on Fleet360.

Fleet manager challenges

The fleet industry has once again had a challenging year. Our clients have had several various challenges in their role. Do you recognise any?

Cost control: Fleet managers need to optimise the fleet expenses, such as fuel, maintenance, insurance, and depreciation, while meeting the operational and customer demands. They also need to deal with the impact of the Covid-19 pandemic on the fleet industry, such as supply chain disruptions, vehicle shortages, delivery delays, and changing customer needs. There is also the continued threat of additional pandemics that might be on the horizon.

Driver Mobility: The changing driver patterns now means offering your employees full flexibility in fulfilling their personal mobility needs is key. The creation and understanding of mobility budgets is critical.

Driver shortage: Fleet managers need to recruit and retain qualified and skilled drivers, who are essential for the fleet performance and customer satisfaction. They also need to provide adequate training, safety programs, and incentives to motivate and engage the drivers.

Safety management: Fleet managers need to ensure the safety of the drivers, vehicles, and other road users, as well as comply with the regulatory and legal requirement. They also need to monitor and prevent risky driving behaviours, such as speeding, distraction, fatigue, and impairment, using technology and data.

Regulatory compliance: Fleet managers need to adhere to the emission standards, safety inspections, driver training, and reporting requirements, as well as keep up with the changing rules and regulations in the fleet industry. They also need to adopt electric vehicles and alternative fuels to reduce the environmental impact and fuel costs of the fleet.

Technology and innovation: Fleet managers need to leverage the latest technology and innovation, such as telematics, artificial intelligence, autonomous driving, and connected vehicles, to improve the fleet efficiency, productivity, and customer service. They also need to integrate and analyse the data from various sources and systems to optimise the fleet performance and outcomes.

“The fleet topic has been high on the agenda in 2023 with many of clients carrying out some key strategic changes and benchmarking to fully understand the health of their car policy and how robust it is for 2024 and beyond.”

Hans Damen, Partner

Your fleet strategy for 2024

It is essential to know your starting point for 2024. Did your 2023 plan achieve its primary objective? If it did, then how do you maintain that momentum. If it didn’t, what can you do differently for 2024. We all know how things can change in 12 months – so it is always good to fully understanding your local and global fleet position to see how ‘healthy’ it really is:

• Conduct a fleet analysis to assess the current state of the fleet, such as vehicle inventory, utilisation, lifecycle, costs, and environmental impact
• Update or check that your fleet policy is for purpose in the changing landscape. Define the roles and responsibilities of the person or department responsible for fleet, other stakeholders, as well as the rules and guidelines for fleet operations, such as vehicle selection, acquisition, maintenance, fueling, and disposal
• Implement a fleet optimisation plan to identify and execute the best practices and solutions for fleet improvement, such as right-sizing, vehicle replacement, preventive maintenance, driver behaviour monitoring, and fuel management
• Monitor and evaluate the fleet performance and outcomes, such as cost savings, efficiency gains, safety records, and customer feedback, using key performance indicators (KPIs) and data analytics
• Review and update the fleet strategy periodically to ensure its relevance and effectiveness, as well as to incorporate new trends and challenges in the fleet industry

We will report back on The Fleet Europe Days conference to see what key topics arose and if these should be on your fleet strategy for 2024.

If you would like to review your car policy or future mobility strategy and get the transparency to make decisions on the right basis, do not hesitate to contact us.

The post Your fleet strategy for 2024 appeared first on Fleet360.

A PHEV would soon become at least 40 eur more expensive per month, rising to 150/200 eur per month towards 2026. The end of the PHEV?

Until TCOFleet, (credit where credit is due) questioned the interpretation of the calculation of the minimum CO2 contribution. This led to a written question to the relevant authorities and they confirmed that one must first calculate the amount of the CO2 contribution using the normal formula with new factors to then look at the evaluation against the minimum amount of 31.34 eur/month (for 2023).

For a petrol PHEV of e.g. 30 gr CO2, this means:

[(30 x 9 EUR) – 768] / 12 x 1.5046 x 2.25 = -140.49 eur but with a minimum of 31.34 eur.

Based on the published table, we learn that one pays more than the minimum from 79gr of CO2 emissions. This means that all PHEVs pay the minimum contribution of 31.34 eur per month (until further notice and like the full electric cars).

So nothing to worry about?

Surely so because from 2025 a maximum tax deduction of 75% applies, from 2026 50%, 2027 25% and 2028 0% for non-zero emission vehicles ordered before 1 January 2026.

But what does this mean financially?

Take a look at the following example:

With the deduction limitation to a maximum of 75%, the (average) car in the example has an impact of +/- 5.4% of the TCO or 66 eur per month (all other tax costs not indexed). A further deduction limitation in 2026, 2027 and 2028 has a doubling, tripling and quadrupling of the additional cost. Spread over a 5-year term (July 2023- July 2028), this gives an average monthly extra cost of +/- 107 eur per month.

The TCO increases from 1243 eur per month in July 2023 to 1511 eur in July 2028 or an average TCO of 1350.20 eur per month over the 60-month term.

Is it better to have a shorter lease term?

A shorter lease term usually results in a higher lease price. In our example:

Shortening the lease term to 48 months increases the lease price to 936 eur per month (in this example) but reduces the additional tax cost to an average of 78 eur per month. The TCO increases from 1282 eur per month in July 2023 to 1490 eur in July 2027 or an average TCO of 1372 eur per month over the 48-month term.

On average, the TCO is 22 eur per month more at 48 months than at 60 months. In this example, it is better to lease at 60 months. It is worth setting up this exercise for the chosen car list or available budgets.

Is PHEV more expensive?

107 eur more expensive per month in our example at 60 months is not insurmountable for those who (mentally) prefer range comfort or those who cannot recharge at home and drive quite a lot of kilometres and still want a tax-friendly car. After all, the benefit in kind due to private use of the PHEV remains minimal or close to the minimum of 1540 eur (for 2023, to be “indexed” for future years).

Moreover, we analysed that an equivalent electric car (e.g. BMW i4 Gran Coupe eDrive35 286hp) is on average +/- 60/70 eur more expensive in lease price per month, albeit with a slightly lower cost for energy.

This means that, until electric cars get closer to the lease prices for plug-in hybrid cars, the TCO for both will be quite close, with a slight advantage for the full electric car (in our example).

Long live the PHEV?

Yes, if the PHEV is used optimally. That is, it runs mainly on electricity and only on petrol/diesel to a limited extent (maximum 30% is put forward as a benchmark).

The electric range of the latest PHEV models goes up to 80 km and above, for smaller cars it’s 50 km and above. This means that most trips (one-way travel) should not exceed 50km with the ability to charge at home and at work. For example, ideal profile is a person who lives less than 50km from work, can charge at home as well as at work. This person will only need to use non-electric mode for longer professional or private journeys, resulting in an optimal energy cost.

If the company fails to profile this correctly in its choice of power train or to include this charging rule in its car policy and/or not to monitor it, it will end up with a substantially higher fuel cost than originally budgeted. Consumptions six times higher, than stated consumption figures by the car manufacturer, are no exception resulting in an exploding TCO.

Not the right profile? Then opt for full electric if the charging options are there. If they are not and many kilometres are driven with trips over 50km, then still opt for diesel or hybrid (not PHEV).

Long live the PHEV for the right usage profiles and charging attitude!

If you would like to review your car policy or strategy with regard to drives or your ideas with regard to your mobility solutions and get full transparency to make decisions on the right basis, do not hesitate to contact us.

The post PHEV is dead, long live PHEV appeared first on Fleet360.

The Evolution of Fleet Management

Fleet management has come a long way since its inception. Traditionally, it involved overseeing a company’s vehicle fleet, ensuring timely maintenance, and managing driver schedules. However, as technology advanced and the business landscape became more competitive, the focus gradually shifted towards optimizing fleet performance.

With the advent of data analytics, fleet managers gained access to a wealth of information that could revolutionise their operations. By leveraging this data, they could identify patterns, uncover inefficiencies, and make data-driven decisions. This marked the beginning of a new era: mobility management.

Understanding Fleet Mobility Management

Mobility management encompasses a broader scope than traditional fleet management. Instead of merely focusing on individual vehicles, it takes into account the entire transportation ecosystem. It involves optimizing various mobility options, such as company-owned vehicles, public transportation, ride-sharing services, and even alternative modes like bicycles or scooters.

By adopting a mobility management approach, companies can ensure that their employees have access to the most efficient and cost-effective transportation options. This shift is especially crucial in urban areas where traffic congestion and environmental concerns are prevalent.

Embracing Data Analytics for Fleet Mobility

One of the key drivers behind the transition from fleet management to mobility management is the use of data analytics. Fleet data provides valuable insights into vehicle utilization, maintenance needs, driver behaviour, and operational costs. By harnessing this data, companies can optimize their fleet mobility in several ways:

1. Demand Forecasting

Data analytics enables fleet managers to analyze historical trends and predict future demand accurately. By understanding usage patterns, companies can adjust their fleet size, ensuring that they have the right number of vehicles to meet demand without excessive overhead costs.

For example, a delivery company can leverage data analytics to identify peak delivery hours and allocate resources accordingly. By optimizing their fleet size during busy periods, they can maximize efficiency while minimizing idle time and associated costs.

2. Route Optimization

Efficient route planning is crucial for fleet mobility. Data analytics can help identify the most efficient routes based on factors such as traffic congestion, road conditions, and fuel consumption. By optimizing routes, companies can reduce fuel costs, minimize travel time, and enhance customer satisfaction.

For instance, a transportation company can use data analytics to identify the most congested areas during specific times of the day. By rerouting vehicles away from these areas or adjusting delivery schedules, they can avoid delays and optimize their overall fleet efficiency.

3. Maintenance Management

Timely maintenance is vital to keep a fleet running smoothly and avoid costly breakdowns. Data analytics can monitor vehicle health, identify potential maintenance issues, and schedule preventive maintenance tasks proactively.

By leveraging data from sensors and onboard diagnostics, fleet managers can detect anomalies and receive alerts when vehicles require attention. This proactive approach minimizes unplanned downtime, reduces repair costs, and ensures that vehicles are in optimal condition, thus maximizing fleet availability.

4. Driver Performance Optimization

Drivers play a pivotal role in fleet mobility. Data analytics can provide insights into driver behavior, including speed, idling time, and fuel consumption. By monitoring these metrics, fleet managers can identify areas for improvement and implement driver training programs to enhance efficiency and safety.

For instance, data analytics can help identify drivers with excessive idling habits. Fleet managers can then provide targeted coaching to reduce idling time, resulting in significant fuel savings and reduced emissions.

Conclusion

The transition from fleet management to mobility management is driven by the power of data analytics. By adopting a holistic approach and leveraging data-driven insights, companies can optimize fleet mobility, increase operational efficiency, and drive business growth.

From demand forecasting to route optimization, maintenance management to driver performance optimisation, data analytics plays a pivotal role at every step of the journey. Embracing this analytical mindset empowers companies to make informed decisions, reduce costs, enhance customer satisfaction, and stay ahead of the competition in today’s fast-paced business environment.

We can help you to embrace the power of data analytics to unlock the true potential of your fleet mobility. It’s time to move beyond traditional fleet management and embark on a transformative journey towards mobility management. Contact us to see how we can help you to strategise for future mobility needs.

The post Moving from Fleet Management to Mobility Management appeared first on Fleet360.

In recent years, companies have been placing more emphasis on CSR. This is partly due to changing consumer attitudes, increased regulatory requirements, and the need to build long-term relationships with stakeholders. As part of their CSR efforts, companies are looking for ways to reduce their carbon footprint, minimize waste, and improve working conditions.

Fleet Management and CSR

Fleet management is an essential aspect of many businesses, particularly those that rely on transportation for their operations. Fleet managers are responsible for overseeing the acquisition, operation, and maintenance of a company’s vehicles. Fleet management can have a significant impact on a company’s CSR efforts.

By implementing sustainable fleet management practices, companies can reduce their environmental impact, lower costs, and improve their reputation. Fleet managers can use data analytics to monitor vehicle usage, optimize routes, and reduce fuel consumption. This can lead to significant reductions in greenhouse gas emissions and other pollutants.

Benefits of Sustainable Fleet Management

Sustainable fleet management can have numerous benefits for companies, including:

Reduced Costs

Sustainable fleet management can help companies reduce their fuel consumption, maintenance costs, and insurance premiums. By optimizing routes and reducing idling time, companies can also improve their efficiency and productivity.

Improved Environmental Performance

Sustainable fleet management can help companies reduce their carbon footprint and other pollutants. This can help companies comply with regulatory requirements and meet stakeholder expectations.

Enhanced Reputation

Companies that implement sustainable fleet management practices can enhance their reputation and brand image. Customers, employees, and investors are increasingly concerned about environmental and social issues, and companies that demonstrate a commitment to CSR can build trust and loyalty.

Steps to Achieving CSR Goals through Fleet Management

Achieving CSR goals through fleet management requires a systematic approach. Here are the steps that companies can take to implement sustainable fleet management practices:

Step 1: Set Goals

The first step in achieving CSR goals through fleet management is to establish clear objectives. Companies should identify their environmental and social impacts and set targets for reducing their carbon footprint, minimizing waste, and improving working conditions.

Step 2: Collect Data

Data is essential for implementing sustainable fleet management practices. Fleet managers should collect data on vehicle usage, fuel consumption, maintenance costs, and other relevant metrics. This data can be used to identify inefficiencies, optimize routes, and reduce environmental impact.

Step 3: Analyse Data

Data analytics can help fleet managers identify patterns and trends in their data. By analyzing data, fleet managers can identify areas for improvement and make data-driven decisions.

Step 4: Implement Sustainable Practices

Based on the data analysis, fleet managers should implement sustainable practices, such as:

• Optimise routes to reduce fuel consumption and emissions
• Use telematics to monitor vehicle usage and driver behavior
• Use eco-friendly vehicles, such as electric or hybrid vehicles
• Implement a maintenance program to reduce breakdowns and prolong vehicle life
• Reduce idle time to improve fuel efficiency

Step 5: Monitor and Report Progress

Fleet managers should monitor their progress towards achieving their CSR goals and report on their achievements. This can help companies demonstrate their commitment to CSR and build trust with stakeholders.

Case Study: UPS

UPS is a global package delivery and logistics company that is committed to sustainability. UPS has implemented numerous sustainable fleet management practices, including:

• Using alternative fuel vehicles, such as electric, hybrid, and natural gas vehicles
• Optimising routes to reduce fuel consumption and emissions
• Using telematics to monitor vehicle usage
• Implementing a maintenance program to reduce breakdowns and prolong vehicle life

As a result of these initiatives, UPS has achieved significant reductions in its carbon footprint. In 2019, UPS announced that it had achieved its goal of driving 1 billion miles in alternative fuel and advanced technology vehicles, which helped the company reduce its greenhouse gas emissions by 3.5 million metric tons.

UPS has also implemented a reporting system to track its progress towards achieving its sustainability goals. The company publishes an annual sustainability report that details its environmental and social performance, including its progress towards reducing its carbon footprint, improving working conditions, and promoting diversity and inclusion.

Conclusion

Corporate Social Responsibility (CSR) is an essential aspect of modern business operations. Companies have a responsibility to ensure that their activities are sustainable and ethical, with minimal negative impacts on the environment and society. Fleet management can play a significant role in achieving CSR goals, as it involves managing the vehicles that companies use for their operations.

By implementing sustainable fleet management practices, companies can reduce their environmental impact, lower costs, and improve their reputation. Achieving CSR goals through fleet management requires a systematic approach, including setting clear objectives, collecting and analyzing data, implementing sustainable practices, and monitoring and reporting progress. Companies that demonstrate a commitment to CSR can build trust and loyalty with customers, employees, investors, and communities, while also contributing to a more sustainable future.

The post The Role of Fleet Management in Achieving Corporate Social Responsibility Goals. appeared first on Fleet360.

The new channel for fleet related chat…

This new biweekly FleetMeet video series is co-produced by Automotive Fleet and Fleet360 to compare and contrast fleet trends occurring in both Europe and North America. The discussion is co-hosted by Hans Damen, managing partner of Fleet360, who is based in Europe; and Mike Antich, editor, Automotive Fleet magazine, who is based in the U.S. and follows North American fleet market trends in the U.S., Canada, and Mexico.

FLEETMEET EPISODE #8 – topics include:

0:32 Exploring the implications of ADAS
0:50 European perspective
2:00 North America perspective
2:57 Negative Publicity
4:00 Assisting the driver with limitations
5:20 The cost of ADAS systems and additional maintenance
6:15 ADAS, driver training and awareness
8:27 Driver annoyance by ADAS
10:27 Cost of replacement parts
11:15 It’s about saving lives

Prefer to listen?

MORE ARTICLES THAT MAY BE OF INTEREST

Email your comments and suggestions for future topics of FleetMeet so we can address them!

The post FleetMeet – The role of ADAS & your fleet strategy appeared first on Fleet360.

In the context of fleet management, mobility budgets, TCM are becoming an increasingly important tool for companies looking to optimize their transportation costs and improve the sustainability of their operations. In this article, we will explore the concept of mobility budgets in fleet management, their advantages and challenges, and provide examples of successful mobility budget schemes.

What is Mobility Costs?

Effective fleet management involves controlling mobility costs, which refers to the expenses associated with employee transportation. These costs can include fuel, vehicle maintenance, insurance, parking, taxation costs and other related expenses. Managing mobility costs is essential for companies to remain competitive and profitable, particularly in industries where transportation plays a significant role in operations.

One way companies can manage mobility costs is by implementing a mobility budget scheme. This system allows companies to allocate a set amount of money to their employees for transportation expenses, which can help to control and reduce mobility costs. By providing employees with a budget, companies can also encourage sustainable transportation practices and reduce their environmental impact.

Example – Mobility Budget in Belgium

The Belgian government introduced the Mobility Budget system in 2018, as part of its efforts to promote sustainable transportation practices. The system allows employees to exchange their company car for a mobility budget, which can be used to cover various modes of transportation

These are expressed in 3 pillars:

• Pillar 1 – being a green/electric company car (usually of a lower budget)
• Pillar 2 – alternative transport such as public transportation, car-sharing services, bicycles,
• Pillar 3 – remainder budget paid in cash and taxed relatively low (38.07%).

The mobility budget is determined based on the TCO value of the employee’s company car (or the average TCO of the relevant car policy category or reference car) and can be used to cover all transportation expenses covered by the 3 pillars.

The Belgian Mobility Budget system has several advantages, including reducing traffic congestion, promoting sustainable transportation practices, and reducing carbon emissions offering bespoke mobility for every individual employee. However, it also presents challenges, such as the need for clear communication and coordination between employers and employees, as well as the need for adequate infrastructure to support sustainable transportation options.

Taxation of Mobility Budgets in the Netherlands

In the Netherlands, contrary to Belgium, mobility budgets are subject to taxation, which can affect the success of a mobility budget scheme. The tax treatment of mobility budgets in the Netherlands varies depending on the specific circumstances of the employee and the company. In general, the mobility budget is subject to income tax and social security contributions, although tax exemptions may apply for certain sustainable transportation options such as electric vehicles or bicycles.

To ensure the success of a mobility budget scheme in the Netherlands, it is essential for companies to understand the tax implications and communicate them effectively to their employees. This can involve providing employees with detailed information about the tax treatment of mobility budgets, as well as offering support in navigating the taxation process.

Examples of Good Mobility Budget Schemes

Several companies have successfully implemented mobility budget schemes, achieving cost savings and promoting sustainable transportation practices. For example, the pharmaceutical company Novartis introduced a mobility budget system in Switzerland, which allowed employees to exchange their company car for a mobility budget that could be used for public transportation or car-sharing services. The system resulted in a 17% reduction in the number of company cars, leading to significant cost savings for the company.

Another example is the mobility budget scheme implemented by the Dutch energy company Eneco. The company offers its employees a range of sustainable transportation options, including electric vehicles, bicycles, and public transportation passes, all of which are covered by the mobility budget. The scheme has been successful in reducing carbon emissions and promoting sustainable transportation practices among employees.

Advantages of Mobility Budgets in Fleet Management

Mobility budgets offer several advantages for companies and their employees, including:

• Improved Cost Management: Mobility budgets can help companies manage transportation costs more effectively. By allocating a fixed budget to employees for transportation expenses, companies can control their transportation spending, reduce travel costs, and increase transparency in their transportation expenditures.
• Increased Employee Satisfaction: Providing employees with the flexibility to choose their preferred mode of transportation can enhance employee satisfaction and retention. Mobility budgets can give employees the freedom to choose the mode of transportation that best suits their needs, whether it be public transportation, car-sharing services, or bicycles.
• Enhanced Environmental Impact: Mobility budgets can help companies reduce their carbon footprint and promote sustainable transportation practices. By encouraging the use of public transportation and cycling, mobility budgets can reduce the number of cars on the road, resulting in fewer emissions and a cleaner environment.

In addition to these benefits, mobility budgets can also help companies comply with local regulations and reduce the administrative burden associated with managing transportation expenses. By streamlining the reimbursement process, companies can save time and money while also promoting sustainable transportation practices.

Overall, mobility budgets offer several advantages for companies and their employees, making them an effective tool for optimizing transportation costs and promoting sustainability in fleet management.

Challenges of Implementing Mobility Budgets

While mobility budgets offer several advantages, implementing a mobility budget scheme can also present challenges. Here are some common challenges that companies may face:

Cultural Resistance: Employees may be resistant to change and may prefer to stick with their current mode of transportation. Implementing a mobility budget scheme may require a cultural shift within the company, which can be challenging.

Administrative Complexity: Mobility budgets require a correct legal set-up and respect for formal requirements, careful administration, including tracking expenses, managing reimbursements, and communicating with employees. This administrative burden can be challenging for companies that are not prepared to manage these tasks.

Taxation and Compliance: Taxation rules and regulations can vary by jurisdiction, making it challenging to implement a mobility budget scheme that complies with local regulations. In some cases, mobility budgets may also be subject to taxation, which can reduce their effectiveness.

To overcome these challenges, companies can take several steps, including:

• Consult the right partner who has the necessary experience and can help you setting the stage
• Clear Communication: Clear communication with employees is essential for the success of a mobility budget scheme. Employers must clearly explain the benefits of the scheme and the requirements for participation.
• Technology: Technology can simplify the administration of mobility budgets, making it easier to track expenses, manage reimbursements, and communicate with employees.
• Flexibility: Mobility budgets should be flexible to allow for different transportation needs and preferences. Employers can work with employees to develop a scheme that meets their needs while also achieving the company’s transportation goals.

Overall, while implementing a mobility budget scheme can present challenges, these challenges can be overcome with the right approach and the help of an experienced partner.

Conclusion

Mobility budgets are an effective tool for managing transportation costs and promoting sustainable transportation practices in fleet management. By allocating a fixed budget to employees for transportation expenses, companies can reduce their transportation spending, increase transparency, and promote environmental sustainability and provide bespoke mobility for employees.

While implementing a mobility budget scheme can present challenges, these challenges can be overcome with a correct set-up respecting legal and formal requirements, clear communication, technology, and flexibility. Ultimately, the benefits of mobility budgets outweigh the challenges, making them a worthwhile investment for companies looking to optimize their transportation costs and promote sustainability.

As companies look for ways to reduce their carbon footprint and improve their environmental impact, mobility budgets offer a practical solution that can deliver tangible benefits. We encourage companies to consider implementing a mobility budget scheme and explore the potential advantages that this approach can offer for their operations, their employees, and the environment.

Fleet360 would be pleased to discuss your needs, your journey and our way of guiding you through the process.

The post Mobility Budgets in Fleet Management appeared first on Fleet360.

Properly managing TCO can help businesses reduce costs, increase efficiency, and improve profitability. Our expertise in the fleet industry and international vehicle taxation can help businesses understand and manage their TCO, ultimately helping them achieve their business goals.

In this article, we’ll provide an overview of fleet total cost of ownership and discuss how businesses can optimise their TCO.

The Key to Understanding Your Fleet Total Cost of Ownership

To effectively manage TCO, businesses must first understand the factors that contribute to it. Fleet TCO is influenced by a variety of factors, including vehicle purchase price, fuel costs, maintenance and repair costs, insurance and importantly vehicle taxation cost. It’s essential for businesses to track and calculate TCO accurately to identify cost drivers and areas for improvement.

This is where data is key an be invaluable. Our team of experts can help businesses analyse their TCO data and identify areas for improvement. By taking a data-driven approach to TCO management, businesses can make informed decisions and optimize their fleet operations for maximum efficiency and cost savings.

Furthermore, we can assist to understand the impact of local car taxation and the underlying calculation methods so you get a complete TCO and insights on how to positively influence your fleet taxation cost.

How to Understand TCO

Understanding TCO is crucial for effective fleet management. Analysing trends in the different elements of the TCO can be a basis for active effective fleet management and a fleet strategy to optimise use of trends or counter negative effects on TCO.

The TCO calculation process involves assessing all the costs associated with owning and operating a fleet of vehicles over their lifetime. To accurately calculate TCO, businesses must consider all the costs associated with their vehicles, including direct and indirect costs.

How to Optimize Your Vehicle Selection Policy

One of the most significant factors that contribute to fleet TCO is the selection of vehicles. Choosing the right vehicles and the correct powertrains for your fleet can help businesses reduce costs and increase efficiency. However, selecting the right vehicles and powertrains can be challenging, given the many factors that need to be considered, including vehicle type, fuel economy, maintenance costs, and more.

With the help of consultancy services, businesses can optimize their vehicle selection policy and select the vehicles that are best suited for their specific needs. Our team can help businesses analyse data on vehicle performance, fuel efficiency, and maintenance costs to identify the most cost-effective options. By making informed decisions about vehicle selection, businesses can reduce TCO and improve their bottom line.

How to Make the Move from Total Cost of Ownership to Total Cost of Mobility

Total Cost of Mobility (TCM) is an emerging concept in the fleet industry that goes beyond TCO to consider the broader implications of fleet management. TCM considers not only the costs of owning and operating a fleet of vehicles but also the costs associated with alternative modes of transportation, such as public transportation, car-sharing services, and more.

By taking a TCM approach (including the initial TCO calculation), businesses can gain a more comprehensive understanding of their mobility costs and make more informed decisions about fleet management. TCM analysis can help businesses identify opportunities to reduce costs, increase efficiency, and promote sustainability.

We help businesses make the move from TCO to TCM. Our team can analyse data on various mobility options and provide recommendations on how businesses can optimize their mobility costs for maximum efficiency and sustainability.

How Fleet Strategy and TCO Work Together

TCO is an essential component of any fleet strategy. By accurately tracking and managing TCO over time, businesses can make informed decisions about fleet operations and optimize their operations for maximum efficiency and cost savings.

Effective fleet strategy involves setting clear goals and objectives and developing a plan to achieve them. With the help of consultancy services, businesses can develop a fleet strategy that aligns with their business goals and maximizes efficiency and cost savings. Our team can analyse data on vehicle performance, maintenance costs, and more to develop a strategy that is tailored to your specific needs.

In summary, TCO is a crucial component of fleet management that businesses cannot afford to overlook. With the help of our consultancy services, businesses can accurately calculate TCO, optimise their vehicle selection policy, make the move to TCM, and develop a fleet strategy that maximises efficiency and cost savings.

The post Fleet total cost of ownership appeared first on Fleet360.

The new channel for fleet related chat…

This new biweekly FleetMeet video series is co-produced by Automotive Fleet and Fleet360 to compare and contrast fleet trends occurring in both Europe and North America. The discussion is co-hosted by Hans Damen, managing partner of Fleet360, who is based in Europe; and Mike Antich, editor, Automotive Fleet magazine, who is based in the U.S. and follows North American fleet market trends in the U.S., Canada, and Mexico.

FLEETMEET EPISODE #7 – topics include:

• Advantages of using a single source of supply
• Disadvantages of single supplier strategy
• Advantages of using multiple sources of supply
• Disadvantages of multiple supplier strategy
• How does single or multi supply impact Fleet?
  

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READ MORE: Single or multi supply summary – making the right choice

Email your comments and suggestions for future topics of FleetMeet so we can address them!

The post FleetMeet – Re-Thinking Sourcing Strategies appeared first on Fleet360.

Choosing whether to go for single or multi supply is a crucial decision when developing a supply chain strategy. Both strategies have advantages and disadvantages.

Although working with multiple suppliers makes the supply chain more complex, it also offers protection from certain risks. Your ideal supply chain strategy will depend in large part on finding a compromise between these two issues.

Advantages of using a single source of supply

A single supplier strategy makes the commitment to buy a specific resource only from that one supplier. Business owners may benefit if the provider is dependable and well-suited. For instance:

• Building a relationship with one provider is simpler than doing so with several
• A collaborative approach might foster trust and mutual gain.
• Costs could decrease as a result of scale
• It could be simpler to integrate systems if you just order from one source.

Disadvantages of single supplier strategy

If your supplier’s activities are disrupted, relying on single sourcing puts you at risk of not being able to receive crucial supplies. The following are typical downsides of this tactic:

• increased supply vulnerability
• higher possibility of supply disruption
• increased reliance between your company and the provider

You can run into problems if you only buy from one supplier and they disappoint you, go out of business, or can no longer match the demand.

Some suppliers may be motivated by exclusivity to provide you with greater service, but others may become complacent and lower their standards. This can occur in asymmetrical dependency situations, when the buying firm becomes more dependent on the supplier than the other way around.

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Driver mobility and the switch to EV

Advantages of using multiple sources of supply

Businesses that wish to distribute demand among a variety of suppliers who collectively have higher capacity and are more buyer-responsive may find that the multiple sourcing strategy is advantageous. Additionally, it is essential when one supplier is unable to satisfy all of the demands of the purchasing organisation, as is the case, for instance, when a product contains numerous components that no one provider is able to manufacture.

Typical advantages of multi supplier are:

• Less reliance on any one source acting as a backup in case of difficulties
• Greater adaptability to deal with unforeseen circumstances that could endanger capacity
• More providers able to handle peak demand, resulting in fewer bottlenecks
• Competition frequently serves as a motivator for suppliers to raise prices and quality of service.
• Additionally, the customer frequently gains additional negotiating power due to rivalry among providers.

Disadvantages of multiple supplier strategy

Multiple supply sourcing may benefit dependency, flexibility and capacity, but it can complicate supplier relationships and require greater resources to manage them. As supplier numbers grow, the price tag often goes up and the following drawbacks can occur:

• Information exchange might get trickier
• Greater fees for managing contracts and carrying out processes
• Reduced volume of orders lower the bargaining position
• Savings potential from economies of scale is diminished
• Issues with effectiveness and quality control can arise.

When it comes to selecting suppliers, smaller firms typically have less freedom than larger ones. If you’re thinking about using numerous supply sources, you should weigh the possible drawbacks of this approach against the dangers of supply disruption that could result from working with only one supplier.

When choosing a supplier, don’t forget to take into account all other pertinent factors.

Concentrate your efforts on selecting and managing strategic suppliers who offer products or services that are vital to your company. Both parties stand to gain from a solid connection.

How does single or multi supply impact Fleet?

• How does the overall supply shortage affect the pros and cons?
• How does the ever increasing alternative products affect the pros and cons?
• How does pandemic experience impact the fleet strategy, fleet size and desire for a mobility driven solution and affect?

There are a number of interconnected elements in you fleet DNA and strategy that heavily affects the impact of each of the above bullets. Such areas are:

• Your EV strategy, status of roll-out and outlook
• The composition of your fleet: passenger cars vs vans vs trucks
• The regional coverage and fleet size by country
• Your procurement, mobility, and HR strategies
• The cars to employees ratios

And although this overview is not pretending to capture it all, it does show that a generic answer to the question “Single vs Multiple suppliers strategy” cannot be given. Fleet360  is here to help you ask internally and externally the right questions to help you come to the right conclusion that fits the needs of your company best.

Get in touch for a chat.

The post Single or multi supply – making the right choice appeared first on Fleet360.