EU vs US The differences

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.