Company Vehicles: Shake Advisories for Fleets

CONJUNCTURE – With the increase in vehicle prices, longer delivery times and the switch to electric vehicles, companies are finding it increasingly difficult to optimize their fleets.

Inflation is catching up with the fleets just as it is poisoning many sectors of activity. First of all, the price of fuel plays like a yoyo, without foreseeable logic. With these uncontrolled movements, fleet managers are unable to anticipate the evolution of this item of expenditure, one of the main ones, since it represents nearly 16% of the cost of using a company vehicle. , according to the Arval Mobility Observatory, think-tank of the BNP Paribas group. According to a study carried out by this structure, the fuel expenditure of companies increased by 21.53% in 2021 and reached its highest level since 2012 and the start of the surveys carried out by this think tank.

The fuel item should not conceal the increase in the price of raw materials. The price of vehicles is rising inexorably and forcing companies to revise the prices of referenced models upwards. “The trading margins are disappearing, and I don’t know if the current grids will be maintained next year”worries Chloé Monthieu, fleet, vehicle and mobility expert within the Epsa group, a consulting firm, one of whose departments focuses on purchasing.

Soaring prices and supply difficulties sometimes lead to the breaking of tripartite agreements negotiated between car manufacturers, long-term rental companies and companies. The discounts negotiated in exchange for large volumes of purchases suddenly disappear and cause an increase in the cost of car parks.

Among the headwinds, companies must also face the shortage of semiconductors. “Electric vehicles have triple the number of semiconductors than equivalent thermal vehicles.explains Marc Mechaï, executive director, head of the automotive sector at Accenture. As for premium vehicles, with their driving assistance, safety and infotainment systems, they mobilize ten times more. However, the automotive industry represents only 10% of the semiconductor market. For producers, and faced with telephony and micro-computing, it is not a priority.

Without electronic components, it became difficult to fulfill orders. Some manufacturers warn their customers of their inability to deliver a particular vehicle. Delivery times now vary from four months to one year with an average of seven months.

A subsidiary of Société Générale, ALD Automotive finances and manages a fleet of 1.448 million vehicles worldwide. For its customers, delivery times reach 200 to 220 days.

More affected by the microprocessor crisis, fleets are not among the priorities for car manufacturers. With less inventory, brands favor customers with whom they make more margin, mainly individuals. Under these conditions, the protocols signed with long-term rental companies are renegotiated and discounts melt like snow in the sun.

Short-term rental companies are suffering even more than businesses. To break the impasse, they appeal to Chinese manufacturers, whose vehicles are less expensive while remaining well equipped. Sixt has therefore committed to buying 100,000 vehicles from BYD by 2028. Another initiative, Hertz Corse has joined forces with Aiways to electrify its fleet with the delivery of 500 U5s, its electric SUV. “If the Chinese enter European territory en masse, through short and long-term rentals, we can expect a new price war”anticipates Marc Mechaï.

In the United States, another operation questions the world of car fleets. In 2019, the Climate Pledge fund of Jeff Bezos, the founder of Amazon, invested in Rivian, an American manufacturer of electric vehicles. By 2030, 100,000 zero-emission vans will be delivered to the American giant to ensure its deliveries. “This operation could serve as a model for companies for which delivery is at the heart of their business model. The acquisition of a stake would make it possible to secure their supply of vehicles”explains Marc Mechaï.

In a particularly complicated context, companies must also negotiate the energy transition. The mobility orientation law (LOM), the climate and resilience law and the tax framework (read box below) strongly encourage them to green their mobility. The pressure is reinforced by the rise of low emission zones (ZFE). Already deployed in 14 conurbations, these areas reserved for the most fuel-efficient vehicles will concern all conurbations with more than 150,000 inhabitants by the end of 2024.

Companies are reacting and electrifying their fleets at high speed. They are even going beyond the renewal percentages required by the LOM (10% from 2022, 20% from 2024, 35% from 2027 and 50% from 2030). At ALD Automotive, plug-in hybrid and electric vehicles account for a third of orders. Over the first nine months of the year, company registrations of electric vehicles increased by 21%. This technology now represents 8.2% of the fleet market. With hybrids, themselves up 5%, electrified models represent 38.7% of car purchases by professionals. Gasoline fell by 8% for a market share of 30.3%, when diesel continued to drop with a drop of 26.3%. Diesel only represents 30% of company fleet registrations.

After peaking, sales of plug-in hybrids fell like a breath. Presented as a panacea, this half-thermal half-electric technology does not pass the test of facts. For daily journeys of 20 kilometers and regular recharging, the plug-in hybrid is a relevant solution and allows drivers to have the autonomy of the internal combustion engine for holidays and weekends. On the other hand, when the batteries remain discharged, when the driver mainly drives on the motorway and travels tens of kilometers each day, consumption soars and, with an overweight of several hundred kilograms, exceeds the consumption of equivalent thermal models. For fleets, the plug-in hybrid represents a transition technology before the switch to electric. Today, the pendulum swing is accelerating.

Taxation favorable to electricity

Two million electric vehicles in 2030. This is the production target in France set by Emmanuel Macron during his visit to the Paris Motor Show held in October. The President of the Republic also announced the increase from €6,000 to €7,000 for the ecological bonus linked to the purchase of a zero-emission model. If this measure concerns the poorest households, the fleets are not forgotten. Even though it dropped the 1er July for legal persons, the bonus still reaches €3,000 and will be maintained as it is at least until the end of the year. As for plug-in hybrids, the €1,000 bonus has been extended until December 31, when it was to disappear on December July.

The bonus can be combined with the conversion bonus, and electric vehicles do not pay for registration. They also escape the annual tax on CO emissions2 and the annual tax on the age of vehicles, the two components of the former TVS (tax on company vehicles). Currently in force, these rules could change next year depending on the 2023 finance law.