This content piece is a paid partnership with Ford Fleet Management
The world of fleet procurement is facing upheaval on many levels.
The automotive sector is wrestling with the shortage of semiconductors, which has led to plummeting production across the globe, meaning fleets are struggling to source vehicles.
Meanwhile, the net zero agenda and the phasing out of internal combustion engine (ICE) vehicles have fundamentally altered the fleet management landscape.
At the same time trends towards more online shopping, and a subsequent increase in van deliveries, were massively accelerated by the coronavirus pandemic.
John Wright, managing director of Ford Fleet Management (FFM), said: “There is no shortage of interest but there has been an impact on the availability of physical vehicles to meet customer demand.”
One solution fleets have found is holding onto existing vehicles for longer, but a fundamental rethink of fleet procurement strategy is on the cards.
Speaking of the changing environment, Wright said: “It allows more open and honest conversations to happen in terms of what vehicles organisations require now, but also planning for the future.
“A lot of fleets we talk to now are literally on the cusp of, ‘How do we bridge from where we are today with ICE vehicles into a fully electrified world?’”
That question is taxing fleet procurement teams, who will be facing pressures from stakeholders to adopt electric vehicles. Company boards will be eager to demonstrate green credentials, while company car drivers will be attracted by the latest electric offerings. However, prices for new electric cars remain high with few value options.
“The simple fact is electric vehicles are a lot more expensive than outgoing ICE vehicles. That’s going to persist for a while until the market normalises,” said Wright.
The market is currently in a period of great change as players grapple with these competing forces, leading to confusion but also opportunities to consider value and total cost of ownership.
“It’s a real time of change and flux,” said Wright. “It’s certainly more interesting than five years ago when everything was a known quantity and everything was broadly commoditised. Everything had a price. The conversation moved away from value to a deep discounting exercise, which is not particularly helpful for anyone because those deals generally don’t last. Ultimately the customer loses out because they can’t get repeatability so they have to change things next time around.”
A race to the bottom in the current climate is not only not possible – there are too many unknowns – but also undesirable.
“We’re not interested in that,” said Wright. “We want to maintain relationships with customers. It’s all about long term because then we can invest and work with them strategically to develop their fleets – from this ICE position today to whenever full electrification occurs.”
Traditional practices of judging the value of a deal on monthly price are becoming less relevant because of electric vehicles, which have much lower maintenance costs.
“The market’s going to be fundamentally different,” said Wright. “You may be paying more per month for the funded element of your new vans and cars but look at the savings that are coming elsewhere.
“The sheer lack of moving parts on an electric vehicle means the life case is wholly different. We should see a dramatic lowering of the real-life costs.
“Our challenge is how we surface that and show it to the customers in a way that hopefully as an industry we can align on and say, ‘This is an acknowledged methodology for comparing one vehicle and scenario to another’.”
FFM offers a complimentary EV consultancy to help procurement professionals navigate this minefield. This includes an analysis covering total cost of ownership (for any make or model), infrastructure solutions, journey planning, funding, and fleet policy.
Out of adversity sometimes comes the greatest innovation, and the challenges of electrification offer fresh opportunities for collaboration.
Ford is currently developing a depot charging solution to overcome the infrastructure hurdle fleets face in charging numerous vans at the same time. Other companies are likely to be working on public charging infrastructure solutions.
“We as an industry need to be collaborative,” said Wright. “Of course there’s a case for being partisan in some things but we’re a multi-brand organisation and the key thing for us is we keep talking about who has the best solution in different areas. No one organisation has every answer.”
FFM is a joint venture between Ford and ALD Automotive – a well-established player in the leasing market – launched a year ago after Ford spotted a gap in the corporate leasing market.
Where FFM sets itself apart is the use of technology to monitor fleets – including all marques – to minimise expensive downtime.
“We’re getting live health alerts from those vehicles,” said Wright.
When oil or AdBlue levels are running low, a maintenance can be planned in and combined with other jobs such as replacing tyres or a broken wing mirror to “corral” three potential visits to the service centre into one. FFM also offers mobile service vans that operate out of hours to minimise disruption further.
“How do we take away those pain points from customers and do it in a way that is cost effective?” said Wright.
“There might be a slight uptick in terms of monthly fixed cost, but there are unseen savings from avoiding taking vans and cars off the road for multiple events and reducing downtime.”
He added: “These conversations aren’t about how cheap you are, they’re about value and demonstrating your use to an organisation as a supplier.”
To find out more, contact Ford Fleet Management:
T: 0370 325 0023
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