EU vs US The differences

Fleet Leasing - EU vs US

International corporations sometimes operate big fleets across numerous countries and continents.

Companies with transatlantic fleets may encounter significant differences in leasing products, fleet management, eligibility, and sustainability across the US and European markets. Below we provides some insights into leasing and fleet management on both sides of the Atlantic, as well as future trends in transatlantic fleet management.

Type of leasing productThe operational lease (closed-end lease) is more frequent, in which the lessor takes the residual risk and the monthly payments are fixed depending on the lease length and mileage.Open-end leases are increasingly frequent, in which the lessee pays the residual risk and the monthly expenses vary depending on the vehicle's depreciation and interest rate.
Scope of servicesThe lease usually includes maintenance, insurance, and other services, which are paid for within the lease by the lessee.The lease usually does not include maintenance, insurance, and other services, which are paid for outside of the lease by the lessee.
Market size and shareThe corporate market is larger and more significant, representing around 15% of new car sales. The retail market is growing quickly and offers new opportunities. The market is dominated by the five multi-brand lessors and the four European manufacturers’ captives.The corporate market is smaller and less significant. The retail market is not very attractive and risky. The market is dominated by the four US fleet management companies.
Market trends and challengesThe market is facing technology disruptions, such as electric vehicles, alternative fuels, and autonomous vehicles, which affect the residual values and demand of vehicles. The market is also facing regulatory changes, such as emission standards, low emission zones, and taxation policies, which affect the cost and compliance of vehicles.The market is facing economic conditions, such as the political turmoil, which affect the supply and price of vehicles and components, competition challenge from Chinese EV brands (less now that 100% tariffs are in place) and to a lesser degree the semiconductor shortage.

The market is also facing customer preferences, such as SUVs, trucks, and crossovers, which affect the fuel efficiency and environmental impact of vehicles.

The vehicle supply chain looks to remain unpredictable. It is harder to plan sourcing with production changes and lead times fluctuate. Due in part to manufacturers' changing investments.
TaxationIn Europe, the taxation of vehicle leasing is mostly dependent on the vehicle's CO2 emissions, which impact benefit in kind (BIK) rates, vehicle excise duty (VED), fuel duty, and capital allowances. The lower the CO2 emissions, the smaller the tax burden for both lessee and lessor. Some governments provide incentives for electric and hybrid vehicles, including lower or zero taxes, subsidies, and exemptions.While a significant cost, taxation is less of a factor in the decision process in the US. In the United States, car leasing taxation is mostly based on vehicle depreciation and interest, which effect monthly open-end lease payments. The lessee may deduct these charges from their taxable income, as well as the price of maintenance, insurance, and gasoline.

However, the lessee is also responsible for paying the vehicle's sales tax, registration fee, and Gas Guzzler Tax (if applicable). The Gas Guzzler levy is a one-time levy imposed on passenger automobiles with poor fuel efficiency ratings.

If you are a Global Fleet Manager, then you already know the complexities and differences between the US and EU markets. We help develop optimised fleet strategy that work for your Global Policy.

Hans Damen – Managing Partner

Trends & challenges

There are significant variances across regional fleet markets around the world. Despite their differences, they have numerous commonalities. Many of the issues that fleet managers face are the same as those that their colleagues face while operating fleets throughout the world.

Vehicle downsizing, fleet rightsizing, cost containment, sustainability initiatives, sole sourcing, fleet standardisation, compliance with governmental regulations and taxation, the emergence of multicultural fleet teams, more international policies governing multinational fleets, and the entry of non-traditional OEM nameplates (such as Korean brands and upcoming Chinese models) into the fleet market are all examples of universal challenges.

Do these sound familiar?

The following are instances of mega fleet trends that are widely felt at every local level yet are, in fact, offshoots of much bigger global patterns.

With procurement’s involvement, the TCO / TCM calculation goes way beyond the vehicle cost (or lease cost in the EU as most services are bundled into that) because the operating costs are unknown – maintenance etc… with that risk on the company for those operating cost estimations. In this way the fleet can be tied more closely to Procurement as these estimations must be done in house for the US whereas in the EU all that is rolled into one monthly lease cost.

The taxation of fleet assets has increased globally, particularly for European and South American fleet cars, which are already severely taxed. There are currently a number of taxes on European fleet cars, including value-added tax, vehicle excise duty tax, business car tax (benefit-in-kind), and other country-specific taxes. In South America, car taxation policies are constantly changing and complicated, posing both monetary and administrative obstacles.

Another common fleet difficulty is dealing with the unpredictable and variable cost of petroleum-based fuel costs, which frequently violates conventional sense, particularly when budgeting for future expenses. Fuel prices are always under downward pressure owing to global crude oil overcapacity. Any decline in fuel prices has been as dramatic as the previous price increase. If sustained, lower gasoline costs will begin to have an impact on overall fleet fuel expenses. 

However, decreasing pricing may lead to driver complacency. Drivers control a big portion of fleet fuel expenses. Many of the hard-earned advances in fleet-wide fuel economy averages can be undone by drivers returning to less fuel-efficient driving habits. Some governments may also be tempted to raise gasoline taxes in response to reduced retail fuel costs in order to overcome chronic budget deficits.

The continuous fleet trend of downsizing to lower displacement engines is global, with the majority occurring in Australia, Europe, and the United States. This includes not just vehicle class size and engine displacement, but also fleet-wide rightsizing. Higher gasoline prices and taxes have boosted operational costs. This is encouraging fleets to request lower displacement engines. Engine technology is always being refined, allowing for downsizing to a smaller engine without affecting fleet applications. Furthermore, improved vehicle quality allows cars to be retained in operation for longer periods of time.

And clearly, as fleets begin to transition to Electric Vehicles, more consideration has to be given to the impact of change and how this change can be achieved across all markets.

Offering different makes and models to drivers is very usual in European business fleets. One of the numerous causes for increased selector variety is the fragmentation of fleet market shares as more OEMs fight for the same pie of the fleet sector.

In the US it is common for the vehicle to be dictated by the company as the vehicle is seen as a work tool and not a perk except in some specialized sales fleets.

There is a growing trend of centralizing common fleet services among foreign business units in order to gain more consistency and value with key business operations on a global scale.

Many multinational fleets have increased the urgency and focus on analysing “Big Data” to better understand the strategic side of fleet management and implement additional cost savings and efficiencies, particularly to unify and manage “data streams” from a variety of third-party vendors.

With increased pressure on corporate car taxes, liability risk, and insufficient administrative resources, several organizations are continuously reviewing the economics of providing a company automobile. In some markets, some employees, particularly younger employees, believe that having a company automobile as part of their remuneration package is less relevant than it was 10-15 years ago and would rather a cash refund. 

However, in certain cities, it is difficult to offer cash instead of a vehicle as the infrastructure and public transportation is not a suitable alternative to a vehicle. Ensuring all near term and long range costs are fully considered and understood is critical for organizations when looking at mobility alternatives.

Globally, there is a growing number of business initiatives to minimize greenhouse gas emissions, with European fleets at the forefront. European environmental rules are shifting from CO2 reductions to reduced aggregated emissions, which include not just CO2, but also NOx and particulates. Despite the hefty expense, many organisations throughout the globe, particularly multinational corporations, are completely dedicated to meeting self-imposed sustainability standards.

A substantial number of worldwide fleets have created emissions baselines and built pickers to help them choose the correct cars to cut their emissions. Another related trend in sustainability concerns the larger notion of mobility management, which would include multi-modal transportation, with fleet managers eventually transforming into “mobility managers” of the future.

One part of mobility management is the development of a mobility budget, which may be used as a financial incentive to encourage employees to travel in a more sustainable manner. Europe is ahead of the curve, with other markets trailing, since there must be viable alternatives to company-provided automobiles, such as a well-connected public transit network easily coupled with ancillary mobility solutions.

Multinational fleets are increasingly requesting standardised safety programmes in the local language, with customization to local legislation and practice, wherever they operate vehicles. Furthermore, international fleets wish to acquire motor vehicle records (MVR) or comparable data in all countries where they are accessible in order to assess driver risk. Companies are also increasingly working on modifying particular driving habits to enhance fuel efficiency, lower operational costs, reduce GHG emissions, and encourage safe driving.

Your North American Team

With our talent and experience, Fleet 360 is in a transparent position to serve your fleet regardless of where it is managed and to communicate effectively with all of your senior leadership across all borders.

Carl Neuberger

Consulting Partner - North America


Carl has over 30 years’ experience in fleet. Specialties include consultative sales and account development while representing major fleet management companies. Serving corporations in the US and globally, he consistently delivered measurable results in fleet cost reduction, managed risk, and total productivity. He is now focusing that experience on the future, assisting clients with decisions on mobility, supply chain and sustainability.

Michael Bieger

Fleet Consultant - North America


Michael has 28+ years client-side experience in the North American and International fleet world as Sr. Director Global Procurement for two fortune 250 companies and a prominent global NGO. He brings operational experience in Fleet management to consulting and is focused on cost and operational optimization, sustainability initiatives, policy development and global alignment. As an AFLA past president he understands and is adept at fostering collaboration across diverse teams and geographies.

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