Process & Procedures: The More Things Change…
While the future of the fleet industry may be hard to predict, the fundamentals still matter.
Ten years ago I wrote the following prediction for 2025 and thought about how things really turned out.
“You and I could not imagine how we got through the last 30 years without two things we once thought were indispensable: a land-line telephone and cable television. Yet this is reality for many under 30’s today. They will soon add one more “can’t live without” – a car. They will opt instead for self-driving cars when they become available, but not as owners.
“By 2025, car ownership will be undergoing a switch to car service on demand. Fleets will provide that car service and replace individuals as the major market for OEMs. Electric vehicles are simpler to automate than ICE-powered vehicles (fewer moving parts and systems) and they will last much longer. Our current business model for fleet management will be upended as a result. Lifecycles, maintenance scheduling, driver training, even managing parking spaces will change significantly. I think one should question the existence in 2025 of two staples of today’s automotive industry: car dealerships and fleet leasing companies. If they are still there, they will be very different businesses.”
2025 realities
Self-driving cars have self-destructed, causing too may collisions and scaring away potential customers. Vehicles will continue to offer driver assistance features, but there seems to be little effort in going beyond this for now. Individual ownership of vehicles compared to fleet ownership is still about the same.
Car dealerships are still here despite facing a near-death business environment because of supply shortages during the pandemic. A few continue to have loads of inventory, but many others have chosen to have limited stock on-site and prefer to order based on actual deals.
Tesla was a small niche player back in 2014, but today, it is a top-tier seller of new vehicles. Fleets are moving cautiously into electric vehicles. Although EVs now claim 15% of the new vehicle market in Canada, they haven’t gained that level of acceptance with most fleets.
Fleet leasing companies have evolved further into data gatherers and information reporters. The emphasis has shifted towards technology, but the fundamentals have not. The number one driver of fleet expenses is still the number of vehicles in service. Reducing fleet vehicle count will drive down costs faster than telematics.
Predicting the future
So, any predictions for the next ten years? I’m not as bold as I was in 2015, because the forces that are at work are going in unexpected directions. A few years ago, governments were declaring climate emergencies and planning to reduce greenhouse gas emissions. Now, they are all about housing affordability and lowering the price of eggs. This focus shifts for short periods when reports of really bad weather, or towns destroyed by wildfires, occupy the front pages of media.
There continues to be a need for critical thinking in fleet management, and for fleet managers to take sensible and well thought-out risks. Fleet managers have opportunities because they handle so many lines of business beyond vehicle acquisition and disposal. Their responsibilities often include fuel, repairs and maintenance, accident reporting and insurance claims, licensing, short-term vehicle rentals, automotive equipment and facilities, data collection and performance reporting, corporate identification, communication with all parts of the organization, information technology, and compliance with road user safety regulations, to name a few. All of these are dynamic, changing rapidly as markets evolve. Keep up the good work.
