Hand-held mobile phone clamped to his ear, regardless of all road safety advice as he impatiently tail-gates slower drivers, the hard-charging rep in his company Vauxhall Vectra has become one of British motoring’s great cliches.
Add his antics to those of the harrassed Renault Megane Scenic-driving mum on the school run; the short-sighted pensioner in the split-screen Morris Minor; and Joe Soap in the ten-year-old Ford Fiesta with the iffy brakes, and it’s amazing there isn’t even more carnage on the country’s overcrowded roads.
Vectra Man looks set to be reproduced all over Europe if some of the major leasing companies have their way.
Axus, for example, believes it is perfectly possible – and desirable – for companies with operations in several Continental countries to construct a pan-European company car policy by working with a single lessor with local representation in all the countries concerned.
Those that do so can achieve significant administrative savings while wielding increased purchasing clout, contends Philippe Op de Beeck, managing director of Axus UK. That is because they are buying vehicles and services on behalf of a number of subsidiaries that previously bought them individually under a variety of different arrangements. ‘Negotiation and management costs in particular will fall,’ he contends.
Companies choosing this route can ensure consistent quality standards across a number of different markets and centralise management information systems to keep a grip on expenditure. Should they wish to, they will be able to see how much it is costing them to run Ford Mondeos in Germany compared to the cost of operating them in Belgium – with the euro making the exercise easier still.
‘The euro will eventually lead to transparency in car pricing, but it will also have an impact on centralised billing, buying and administration, making it easier to establish and evaluate European car policies,’ Op de Beeck observes.
The retail price of cars in Britain is, of course, notoriously higher than the prices in many other European markets. The advent of the euro and the move towards greater European harmonisation will probably force manufacturers to eliminate these differences, says Shankar Remanathan, director of marketing at British Car Contracts. However, country-by-country differences in the warranties offered on cars may remain, he suggests.
Op de Beeck is not just talking about centralising vehicle acquisition. He contends that big savings can be achieved by negotiating insurance arrangements in the same way – not to mention agreements with fuel card providers. Independent fleet management specialist PHH contends that issuing all fleet drivers Europe-wide with a fuel card can help a company achieve savings of between 5% and 10% on fuel costs.
Op de Beeck’s vision is shared by Ian Tilbrook, Lease Plan International’s sales director; Lease Plan operates over 500,000 vehicles across 18 European countries. ‘I know of one group with 4,600 cars which has 69 suppliers of vehicle management services in 14 countries,’ he says.
‘That means they’re buying what they need 69 times in 69 different ways, and they’re not getting the purchasing leverage they could otherwise achieve. Under those circumstances, if you opt instead to deal with a single supplier like Lease Plan, then we can offer you terms on the 60 cars you run in, say, Italy, that reflect the fact that you operate over 4,000 elsewhere.’
But how far can a leasing company, or indeed a fleet operator who elects to buy outright and manage everything in-house, obtain better purchasing terms from car makers by consolidating buying clout? ‘The more you put on the table, and the more you whet their appetite, then the more the vehicle manufacturers will put on the table too,’ replies Sue Branston, European business development director at Dial Contracts.
That’s true, but only up to a point, says Norman Donkin, director general of the British Vehicle Rental and Leasing Association.
‘The big contract hire companies already enjoy huge buying power in the UK, and the amount of additional discount they can obtain is limited,’ he says. They might get another half a per cent, he suggests, but it is unlikely that they will be able to push motor manufacturers much further.
Garage and fast-fit tyre, exhaust, and battery networks are at different levels of development across Europe. Although some fast-fit brands established in Britain are well-represented in certain Continental markets – Michelin-owned ATS Euromaster is a good example – others are barely known on the other side of the Channel.
While this can make establishing a Europe-wide maintenance policy difficult, it does not make it impossible providing companies are not too rigid and are prepared to select the best realistically available in local markets.
PHH suggests that one option may be to issue all drivers with a service card in those countries where the fleet is more than 100 vehicles strong.
Under this type of scheme, an organisation like PHH can pre-authorise service work and repairs and vet all garage invoices, invoicing costs to the client on a consolidated invoice for the whole fleet. Again, the euro will make this exercise easier.
‘On average, this translates into savings of between 5% and 15% on maintenance costs across the board, depending on the quality of maintenance management previously in place,’ says the company.
Op de Beeck admits that there are a number of hurdles to leap over before his pan-European concept can be fully implemented. Among them are national sensitivities and the ways in which local car markets work.
‘For instance, Rover residual values are going to be better in the UK than they are in Italy, which is dominated by Fiat,’ points out Sonja Clarke, sales and marketing director at Hertz Leasing Europe. That is going to have an impact on whole-life costings and the rates at which a lessor can supply vehicles in each market.
UK firms tend to provide their employees with a better standard of car than their Continental counterparts, says Norman Donkin. ‘A salesman in Germany is more likely to be driving a basic Volkswagen Golf than a well equipped Mondeo, and is unlikely to be provided with features such as air conditioning or electric windows.’
Then there’s the sophistication of the company car market in the country concerned to take into consideration. Britain’s fleet sector is highly-developed. That in Greece, for example, is not.
After that, there are differences in car road tax and in the personal and corporate tax treatment of fleet vehicles, although most governments are adopting increasingly similar stances in the latter area, says Op de Beeck.
Ian Tilbrook points out that Denmark has recently come into line with a number of its neighbours by allowing leasing companies to recover the VAT on the cars they purchase. ‘Policies on capital allowances are also becoming increasingly similar,’ he remarks. But convergence still has some way to go, Op de Beeck admits.
Differing fiscal policies mean that, while sale and leaseback is always a possibility in Britain, Belgium, and the Netherlands, it does not make financial sense in Italy.
Disparities in benefit-in-kind taxation mean that private usage of a company car is heavily taxed in certain countries – the Netherlands, for example – says Norman Donkin. The period over which vehicles are run differs too, says Ian Tilbrook. ‘The Italians change their cars at two years, the French at three, and the British increasingly at four,’ he comments.
While this can make comparing whole-life costs tricky, it does not prevent a lessor with, say, several major clients in the chemical industry, comparing how much it costs each of them to run their European vehicle fleets, and establishing benchmark figures. How often different nationalities like to change cars will not make any difference to the exercise, because all the firms will be affected in the same way.
Op de Beeck is convinced that, if a firm picks the right supplier of vehicle finance and related aftersales and management services, all the foregoing barriers can be overcome. ‘We’ve already negotiated several deals of this type with major companies – Smith and Nephew, and Intel, for example,’ he says.
‘Much of the interest comes from US multinationals, which tend not to take cultural barriers into account.’ Smaller firms with offshoots in just two or three countries can benefit too, he adds.
Sonja Clarke argues that it is both impossible and undesirable to establish a rigid arrangement that says all junior sales reps must drive exactly the same size and make of vehicle, no matter whether they are based in Glasgow or Gothenburg.
Aside from the country-by-country differences in size of car and specification alluded to earlier, nationalism creeps in too.
A French company is likely to stay loyal to Renault, Peugeot, and Citroen, notwithstanding any front-end savings that might be achieved by switching to an all-Ford policy across the EU.
Are manufacturers ready?
Views on how far motor manufacturers are geared up to dealing on a pan-European basis differ from one leasing company to another.
Lease Plan has just achieved a cross-border preferential agreement with Mercedes, Volkswagen and Audi, on behalf of Computer Associates, says Tilbrook. ‘Overall, however, the motor manufacturers have been quite slow in adapting themselves to this sort of arrangement.’
Companies like Ford have franchised dealers all over the world, and should themselves be capable of putting together global leasing packages which meet the needs of big multinationals. But, if you go to Ford, all you will get is a Ford (although Ford also owns Jaguar). That is something of a drawback if all your top-flight sales managers are clamouring for BMWs.
While the major leasing companies all point to the administrative savings that can be achieved by going pan-European, they add that the customer can only derive the maximum benefit by dealing through a single supplier of fleet management services.
Aside from the fact that a big company may feel it has sufficient ability in-house, and can obtain enough economies of scale not to outsource anyway, it may also be reluctant to place all its fleet business with a single provider, no matter how big or reputable it may be. It may prefer instead to forego any savings achievable through single sourcing, and deal through two or three, taking the view that competition will keep them all on their toes and result in a better service.
Whatever decision a fleet operator reaches, flexibility is the watchword, reiterates Steve Simpson, head of European developments at Swan National. ‘Europe is not one market, but a fusion of 15, so – while we look to co-ordinate the overall service – that does not mean every country has to be identical,’ he observes.
‘You have to deliver a product which fits the customer’s needs in each country.’
AXUS’ CHECKLIST FOR COMPANIES CONSIDERING A PAN-EUROPEAN COMPANY CAR POLICY Define the objectives of the exercise. Is it about cost-saving with its consequent internal changes, or harmonisation of pay and benefits?
Decide the scope of the deal. Will it be phased in, or implemented in all countries at once?
Bring together a team of competent people, taking into account the importance of different countries, to manage the change process.
Then, and only then, should you start to look at selecting one or more leasing companies (although this assumes you have decided to take the leasing/outsourcing route). Choosing a single supplier can create greater volume leveraging and reduce internal costs in terms of management information systems, accounting and driver contact.
Talk to companies with a corporate presence in all the major countries of interest to you, and which offer a central point of contact and organisation.
Check your supplier (or suppliers; you may wish to split the business between two or three) can establish a central policy and manage local implementation, taking into account issues such as local taxation, acquisition methods, and fleet policies, while allowing for different cultural needs at a local level.
Check that your supplier can deliver consistent central reporting.
Having chosen the supplier, work together to look at fleet competition and negotiate on a European level to achieve the biggest cost savings.
Rationalising the fleet content from the average of around 30 manufacturers to about seven normally allows you to satisfy local preferences while providing the required level of leverage.
Repeat the process with fuel suppliers. Savings can be realised through European negotiations.
Establish regular review dates to make sure you are maximising the benefits of your European deal in terms of cost control and reduction, administrative efficiency, and driver satisfaction.
Steve Banner is a freelance journalist
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