Great news about a small business in the leasing sector delivering world class-customer service.
The 8th annual edition of Company Car and Van Tax has just been published by Eyelevel Books, in conjunction with KPMG, Ogilvie Fleet, Low Cost Vans and Fleet Operations.
Company Car and Van Tax 2018-19 has been fully updated and includes information on optional remuneration, salary sacrifice and car allowances.
The book covers everything a fleet manager or company vehicle driver needs to know about tax, including car benefit tax, fuel benefit tax, VAT, income tax, corporation tax, capital allowances, fuel duty, vehicle excise duty and national insurance contributions.
Published in conjunction with KPMG, Fleet Operations, Low Cost Vans and Ogilvie Fleet, and is available from amazon.co.uk, tourick.com and all good bookshops, priced at £50 paperback or £41.67+VAT PDF ebook.
The paperback will be available late June 2018, PDF is available now for immediate download.
Article published in Fleet World
Strolling through a leafy London suburb, I happened to notice a parked car onto which someone had written the words “Diesel Danger”. As I had been planning to write about diesels this month this was too good an opportunity to miss, so I whipped out my camera and started taking photographs.
I then noticed Bill Oddie standing next to me (yes, really, and if you are under 30 I’m sorry if you don’t know who I’m talking about). He was wearing a facial expression that said “Who the heck are you and why are you taking photographs of my car?” I introduced myself and explained that I was taking the photos to accompany this article. He said “Will you be able to do anything about the scourge of diesels?” and I said probably not, but I would try. He then smiled and invited me to look at the other side of the car, on which he had written “They said it was safe….”.
He’s right of course, they did tell us diesels were safe. When the tax system was altered to take account of engine emissions, companies changed their car schemes to favour diesels because this was the environmentally-friendly option that saved NI for the employer and income tax and NI for the employee.
The problem was, whilst reducing CO2 would save the planet, an increase in the number of diesel cars would boost the quantity of oxides of nitrogen (NOx) being pumped into the atmosphere, and NOx is a pollutant that kills.
We now have a perfect storm brewing. Diesel is a dirty word, the fuel has no friends in the corridors of power, the Transport Minister has already warned people off buying diesel cars and from 23 October Sadiq Kahn, the Mayor of London, will introduce a £10 toxicity charge for cars, vans, minibuses, buses, coaches and HGVs not meeting Euro 4 standards.
DEFRA lost a High Court case in May as a result of which it was required to publish its draft plans for addressing the problem of nitrogen dioxide. We learned from this that the government likes the idea of local authorities introducing clean air zones (but isn’t too keen on motorists being charged to drive into them), expects Birmingham, Derby, Leeds, Nottingham and Southampton to introduce clean air zones by 2019 and wants dozens more towns and cities to follow suit soon after. The much-discussed diesel scrappage scheme is still being considered, though if introduced it would clearly have to be focussed on removing the most polluting vehicles only otherwise the cost would be astronomical (£60bn were every diesel car and van to be scrapped).
For fleet managers, the key line in the report was buried in clause 54 “The Government will continue to explore the appropriate tax treatment for diesel vehicles and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017”.
Whilst civil servants are not allowed to speak publicly on matters affecting policy in the run up to the election, the mood music coming out of the corridors of power is not that encouraging for fleet managers. The government urgently wants to reduce the number of diesel cars on the road. As someone told me “They are looking at everything: benefit in kind tax, vehicle excise duty, writing down allowances, AMAP rates, national insurance, everything”.
Whilst sales of diesel vehicles are down 6.4% year on year, there were still more than 400,000 diesel cars sold in the year to end April 2017 and the government thinks this number is too high.
As it happens the blanket “diesel is bad” analysis is a bit unfair on car manufacturers, who have reduced NOx and other emissions in line with the latest Euro 6 standard, which makes new vehicles cleaner than ever before.
|Emissions standard||Applied to new passenger car approvals from||Applied to all new registrations from|
|Euro 1||1 July 1992||31 December 1992|
|Euro 2||1 January 1996||1 January 1997|
|Euro 3||1 January 2000||1 January 2001|
|Euro 4||1 January 2005||1 January 2006|
|Euro 5||1 September 2009||1 January 2011|
|Euro 6||1 September 2014||1 September 2015|
Euro 6 was implemented for new vehicle approvals on 1 September 2014, and all new registrations had to comply with Euro 6 standards from 1 September 2015. So a significant proportion of existing fleet cars now emit very low levels of NOx indeed, as these charts show.
|Euro 5||1.0g/km||0.10g/km||0.06g/km||0.005g/km (direct injection only)|
|0.06g/km||0.005g/km (direct injection only)
|6.0×10 ^11/km (direct injection only)
|Emissions standards||CO:||HC + NOx:||NOx:||PM:||PM:|
|Euro 5||0.50g/km||0.23g/km||0.18g/km||0.005g/km||6.0×10 ^11/km|
However, you can be sure that as more members of public hear the message “diesel is bad” they will be less inclined to buy used diesel cars. This can only reduce residual values and lead to an increase in lease rentals (or depreciation for fleets that buy their cars or fund them via hire purchase).
Which takes us to the key question for fleet managers: given that the government is so keen to discourage the use of diesel cars, how can fleet managers protect their companies (and employees) against rising costs? The obvious answer is to start looking seriously at the alternatives.
Whatever changes the government introduces we can be sure they will still be committed to reducing CO2. The need to reduce global warming isn’t going to go away, so the safe bet is to look for low-CO2 alternatives to diesel-engined vehicles.
And there are a lot to choose from these days.
For example, smaller, petrol-engined cars. Many manufacturers have done a great job in making smaller power units that are lighter but more powerful. Some of these cars deliver very good performance with low CO2 and NOx output.
If you haven’t yet added hybrid vehicles to your fleet, now is the time to consider these. Low emissions, high mpg, proven technology and pretty high residuals (which deliver low rentals). What’s not to like?
You don’t have any plug-in electric cars on your fleet? Range anxiety can be an issue with battery-powered vehicles, but if you analyse the journeys your employees are driving you may well find employees for whom an electric car would work most of the time, except for the occasional journey that could be handled in a rental car or pool car. Most of these cars are still expensive to buy, even with the government grant, but the cost of the fuel is tiny compared with filling up at the pump.
This sort of analysis is valuable at any time but could be particularly valuable now that we know the government has diesel in its cross-hairs. Looking at your attitude to diesel now could make a lot of sense.
Professor Colin Tourick
21st April 2017
UK Fleet Operators anticipate greater demand for petrol vehicles
The latest ExpertEye Fleet Industry Review highlights a move towards petrol vehicles for UK fleet operators together with a growing demand for alternative fuels.
Produced in association with Professor Colin Tourick from University of Buckingham, ExpertEye’s latest review provides valuable insights into the latest status and views of the UK fleet marketplace. Despite Brexit now a certainty, coupled with the recent election announcement and news of changes to company car taxation in the Spring Budget, the UK economy is not showing signs of drastic change.
Based on a survey of over 200 fleet operators the findings include:-
- More companies are putting petrol-engined cars back onto their fleet lists, or drivers themselves have decided to opt for petrol.
- Respondents expect to see a reduction in diesel in the next two years, with electric, electric range-extended and hybrid engines gaining in popularity. A significant number of them believe that petrol will be making a comeback.
- Almost no respondents (the UK’s fleet operators) expected the economy to shift drastically either up or down but they are slightly less optimistic than before.
- More than half of respondents expected no change in demand for cars and more than three quarters expected no change in demand for LCVs. Of the few who expected demand to decrease, 20% said there would be decreased demand for cars (the highest level since H2 2013) and 7% said there would be decreased demand for vans.
- Contract hire remains the predominant form of finance used by businesses, though there has been a steady growth in respondents using finance lease and Professor Tourick suggests reasons for this in the Review.
- Reliability, fleet running costs and fleet safety and risk management remain top of respondents’ concerns as they ponder fleet management decisions they will be making in the next 12 months.
The ExpertEye Fleet Industry Review is based on a biannual survey of fleet operators which measures their practices and references attitudes and opinions on a wide range of issues:
- fleet profiles and policies
- the current economic and fleet environment
- factors influencing supplier and vehicle choice and
- Predictions about vehicle requirements and influences.
With trends going back 7 years this report contains a unique insight into the key factors driving fleet acquisition decisions including commentary and analysis from a leading industry expert. The Review contains a summary of the survey and analysis of the results provided by Professor Colin Tourick at the University of Buckingham, on behalf of ExpertEye ag.
ExpertEye offers extensive insight into the automotive market across Europe. Utilising research and key data from leasing providers, vehicle manufacturers, dealers, fleet operators and the drivers themselves, we provide the complete range of business feedback about all aspects of the leasing, buying, maintenance and renewal processes.
For more information please contact email@example.com
Article published in Fleet World
Normally, when the government publishes the draft wording of a Finance Bill, the fleet press and commentators rush to give their thoughts, but that didn’t happen on 20 March when the government published Finance (No. 2) Bill 2016-17, the legislation that enacts the chancellor’s spring budget. They had good reason to hesitate, because the government’s proposals are complex and far-reaching and it seems that everyone has needed to take a little longer to work out what it all means. The key areas fleet managers need to be aware of are that the draft puts flesh on the bones of the new approach to salary sacrifice that was announced in the Autumn Statement and introduces a very different approach to cash allowances.
At least one major accounting firm has suggested that the new rules will also affect Employee Car Ownership Schemes (ECOS) but at the time of writing this is unclear, as is the position when an employee who has the right to a cash allowance instead of a company car selects a company car below their entitlement level, i.e. they ‘trade down’. Trading up was referred to in the draft legislation but not trading down.
This article ignores these uncertainties and concentrates on the things we definitely know.
As the government had already announced, from 6 April 2017 any tax and national insurance contributions (NICs) advantages under salary sacrifice arrangements will be withdrawn.
Just to recap, under a salary sacrifice arrangement an employee gives up the right to some salary and receives a benefit instead.
When salary sacrifice is used for cars, the employee saves tax and employees’ NIC, and the employer saves employers’ NIC. The employee pays benefit in kind tax under the normal rules for company cars. Historically, if an employee chose a relatively low cost, low-CO2 car they could make savings. Salary sacrifice schemes have predominantly been used to provide cars for employees who would not otherwise be entitled to a company car, most of whom have been basic rate taxpayers.
The draft legislation describes these arrangements as ‘optional remuneration arrangements’ (OpRAs). The industry knew that salary sacrifice schemes were being reviewed in 2016, but before last November they had no idea that the government would include cash allowances in the rule changes. This has been confirmed in the wording of the draft bill.
If your company operates a salary sacrifice arrangement or offers benefits such as company cars or the option to take a cash allowance in lieu of those benefits, you need to understand the new rules. Even employers that have never offered salary sacrifice but offer employees the choice between a cash allowance and a company car are caught by the new rules. An awful lot of companies, tens of thousands and maybe more, now have to consider how these changes affect them.
The draft legislation describes two types of OpRA, both of which will now be regarded as conferring a benefit on the employee.
- Under Type A arrangements the employee foregoes earnings in return for the benefit (e.g. a salary sacrifice car)
- Under Type B the employee receives a benefit rather than some earnings (e.g. takes a company car rather than a cash allowance).
And here is the key piece of information: if an employee choses to take a benefit instead of an amount of salary, they will be taxed on the greater of the salary given up and the taxable value of the benefit in kind.
The legislation includes provisions designed to stop people claiming that a particular type of benefit or form of salary reduction falls outside the scope of the rules.
There are transitional arrangements. If someone took a car emitting more than 75g CO2/km on a salary sacrifice scheme before 6 April 2017 they will be taxed under the old rules (the normal company car BIK rules) until the earlier of 6 April 2021 or the date when they modify or renew the deal. If the car emits less than 75g CO2/km the old rules continue to apply.
If an employee changes or renews the OpRA on after 6 April 2017 the new rules will apply from the date of the renewal or change. Amendments that arise because of matters that are not within the control of the employer or employee – e.g. the car is written off and replaced, or the employee is allowed to vary the arrangement because they take are on extended sick or leave or maternity leave – are not regarded as changes for this purpose.
Is a car emits more than 75 grams CO2/km and the employee has sacrificed salary, they will be taxed either on the normal basis for a company car (which is broadly; list price multiplied by a percentage based on the CO2 emissions of the car) or on the amount of salary they sacrificed, whichever value is the higher. To determine whether the benefit in kind or the salary sacrifice delivers the higher value, any capital contribution made by the employee towards the purchase of the car or payments for private use are ignored in the initial calculation (called the “modified cash equivalent”).
Once the appropriate amount has been calculated the employee gets credit for any capital contribution (capital contribution [max £5,000] x the appropriate percentage). Credit is then given for any private use contribution.
Fortunately, HMRC has provided an example of how this will work in practice. Assume an employee has a car for the whole of 2017-18, for which they sacrificed £300 salary per month, and they also paid £1,500 to get a higher spec car than their limit allowed. The car’s list price is £20,000 and it has an appropriate percentage of 17%. The normal cash equivalent value of the vehicle would be:
- £20,000 less capital contribution £1,500 = £18,500 x 17% = £3,145
The modified cash equivalent is:
- £20,000 x 17% = £3,400 (the capital contribution is ignored).
The sacrificed salary exceeds the modified cash equivalent, so the sacrificed salary will be used to calculate the additional amount to be treated as earnings and taxed.
Therefore the taxable amount is £3,600 less £255 (capital contribution of £1,500x 17%) = £3,345.
This approach also extends to free fuel supplied to an employee who gives up salary for the right to receive free private fuel paid for by their employer. They will be taxed on either the cash equivalent value of the fuel (calculated on the normal basis where the fuel multiplier of £22,600 is multiplied by the appropriate percentage based on the car’s CO2) or the amount of salary sacrificed by the employee for the benefit of the fuel, whichever is the greater.
So if an employee sacrifices £400 per month and their employer pays for private fuel for a company car with an appropriate percentage of 20%, the cash equivalent of the fuel benefit will be £4,520, the sacrificed salary will be £4,800, and as the sacrificed salary exceeds the cash equivalent value of the fuel, the employee will be taxed on £4,800 not £4,520.
A similar calculation needs to be made if salary is sacrificed in return for being given a company van or free private fuel for such a van.
It’s going to take some while for fleet managers and the fleet industry to get their minds around this sort of logic and there are a lot of consequences of these new regulations.
- When choosing their company cars, employees need to know how much tax they are going to pay. Currently this is normally shown on the leasing company’s quotation screen. In future, these screens will have to be modified to provide the correct figures, and the systems will have to hold information about cash allowances, capital contributions, personal contributions, etc.
- Employers are going to have to decide whether to keep cash allowances at current levels or reduce them. If the company offers a generous cash allowance scheme many employees will find that they are being taxed on a cash allowance they haven’t received.
- The new rules may reduce the incentive for employees to choose low CO2 cars. Employers have to decide how they wish to manage this, or indeed whether this is important to them.
- Salary sacrifice schemes still work, but the interplay between salary sacrifice, cash allowances and ‘normal’ company-car based benefits in kind tax mean that leasing companies are going to ensure that their quoting system provide the employee with all necessary information on which to base a decision about whether to enter into the salary sacrifice arrangement.
Professor Colin Tourick
Article published in Fleet World
This is the third time in the last twelve months that we have looked at salary sacrifice in this column, and I make no apologies for returning to it now. There are so many myths about the impact of the Chancellor’s announcement in November that it’s definitely worthwhile taking a deeper look.
Just to recap, in a nutshell, the changes the Chancellor announced were as follows:
If an employee takes a car emitting more than 75g/km of CO2 they will pay the higher of (1) the relevant level of Benefit In Kind (BIK) tax for that car or (2) tax on the amount of salary sacrificed. The changes commence on 6 April 2017 for new agreements and 6 April 2021 for agreements that were live on 6 April 2017. Cars with 75g/km or less (ULEVS – Ultra Low Emission Vehicles) are not affected by the changes.
So, let’s knock on the head some of the myths that have been flying about.
- “Car salary sacrifice schemes have been banned.”
That’s not correct. The tax treatment has changed for some cars but employers can still offer salary sacrifice for cars.
Imagine a situation where you are about to start a new job and the HR person goes through a nice long list of all of the benefits of employment. “We also offer a simple scheme whereby you or a member of your family can drive a brand new fully-insured car using the discounts we have negotiated with our suppliers and the interest rate we pay when borrowing money. In other words, you get the benefit of our buying power.”
Wouldn’t that sound attractive to you? Well that’s still the position. Yes, some tax benefits will only be available for cars emitting more than 75g/km of CO2 from 6 April, but this doesn’t stop the employee getting the benefit of their employer’s buying power, whilst still enjoying other savings like employee National Insurance.
- “Salary sacrifice schemes will end in 2021.”
That’s not correct either. Cars that are ordered under salary sacrifice arrangements before 6 April this year will benefit from the old tax rules even if they are delivered afterwards. The 2021 date refers to how long the existing tax treatment of current contracts, and new contracts signed before 6 April, will be protected for.
- “Salary sacrifice is going to become more expensive for everyone.”
Also, incorrect, and not just because the rules remain unchanged for ULEVs.
Salary sacrifice cars were always regarded as regular company cars for tax purposes. BIK tax rises annually and will continue to do so for all company car drivers. If the BIK tax an employee is paying on their car already exceeds the income tax on the salary being sacrificed, they will be unaffected by the new rules.
This point, which is explained in more detail in the Range Rover Evoque example below, has not received enough publicity. One leasing company carried out an evaluation of the effect of the new rules on their salary sacrifice clients. They started by assuming that every salary sacrifice employee currently driving one of their cars would have stared their contracts after 5 April. According to their evaluation, 46% of those drivers would be paying no more tax under the new rules than they are paying now in BIK tax. If they did have to pay extra tax, in most cases this would be less than £5 per month. Of course, the employees could avoid this extra cost by simply choosing lower-CO2 or cheaper cars.
- “The changes do away with tax and national insurance benefits.”
We’ve already dealt with the tax benefits. Employers will no longer make Class 1A NI contribution savings on vehicles with emissions above 75g/km of CO2. But there has been little publicity about the fact that the Chancellor’s announcement does not affect employee national insurance at all, so there are still NI savings to be made. 75% of current salary sacrifice drivers in the UK are basic rate tax payers so this represents a 12% saving on top of the other discounts.
- “Many companies are withdrawing from salary sacrifice schemes.”
In fact the opposite appears to be the case. The day after the Chancellor’s autumn statement a couple of large companies announced that they were withdrawing their salary sacrifice schemes. However, leasing companies have said publicly that they have launched many new schemes since November. It seems that a backlog had built up whilst employers waited to hear what was said in the Autumn Statement. And many employers have realised that their employees value these schemes even without the tax benefits.
- “Salary sacrifice is now only worthwhile for ULEVs.”
As already shown above, this is not correct. However, the savings will be good for ULEVs under the new rules.
Let’s now look at a couple of interesting examples. In the first example, we can see that there is still a saving to be made by the employer even though the CO2 of this vehicle significantly exceeds 75g/km.
|The employer’s position|
|Current||Post April 2017|
|Vehicle & CO2||92 g/km||92 g/km|
|Vehicle scale charge||20% (ave)||20% (ave)|
|Gross salary reduction||£366.53||£366.53|
|Benefit in Kind||£301.00||£301.00|
|Class 1 NI that would be paid on salary||£50.58||£50.58|
|Class 1A NI payable on gross reduction or taxable benefit, whichever is higher||£41.54||£50.58|
|Net saving per employee||£9.04||£0.00|
|Average annual net saving||£108.48||£0.00|
|Average pension saving per employee (if employer reduces gross pay for pension purposes)||£51.31||£51.31|
|Monthly net saving||£60.35||£51.31|
|Annual net saving||£724.20||£615.72|
ULEV vehicle example Current
And in this high-CO2 and high P11D value example the driver will see no increase, as they are already paying more in gross BIK than the gross salary being sacrificed.
| Range Rover Evoque – 40% tax payer
|The employee’s position|
|Current||After 6th April 2017|
|Value of the car (P11d)||£36,562.00||£36,562.00|
|CO2 emissions & Average HMRC BIK Rate||113g | 22%||113g | 22%|
|Gross salary sacrifice per month||£ 567.14||£567.14|
|Monthly BIK (P11d value x CO2% x marginal tax rate, divided by 12)||£ 268.12||£268.12|
|Income Tax saving (gross sacrifice x tax rate)||£ 226.86||£226.86|
|NI saving per month (this saving will remain)||£ 11.34||£11.34|
|Tax due (BIK or income tax whichever is higher)||£ 268.12||£268.12|
|Net cost to employee||£ 597.06||£597.06|
|(Gross cost – NI saving – Income Tax saving + Tax due)|
I suspect that once they do the sums, most employers will decide to stick with their salary sacrifice schemes. The calculations now have to be done slightly differently but the financial logic in favour of salary sacrifice for cars remains intact.
Professor Colin Tourick
Article published in Fleet Leasing
When I downloaded an app that allowed me to check nitrogen oxide levels close to my home, I was disappointed that the readings were two weeks old. Then I became interested in my disappointment. Much of the research data I look at is months old, yet here I was expressing disappointment with readings that were just two weeks old.
How our expectations have changed. We expect everything instantaneously and are disappointed if we can’t get it. Let’s bear this in mind as we start discussing the future of the fleet leasing industry.
In the long term, say 10-15 years, fully autonomous vehicles will be ubiquitous. People who prefer to drive may be viewed as “hobbyists”, much as we now regard those who take photographs on film then develop and print the results. Most of us live in cities and won’t want to own cars because we will be able to summon up an autonomous vehicle at will, just like we book an Uber today.
Whether they will actually be operated by Uber or a similar company is open to debate. The speed of Uber’s rollout (and their losses) have been spectacular, and they are working on autonomous cars, but once a new autonomous car rolls off the production line it will be able to find passengers for itself. In this scenario, what value does an Uber-like company add?
Someone will need to buy the cars, charge for journeys, manage maintenance and so on, and fleet leasing companies would be well-placed to do so, though this role could also be performed by wholesale funders or indeed the manufacturers – they have most of the infrastructure already and just need cash on day 1 to replenish their working capital. However, once vehicles are able to report their own faults, book themselves in for repair and drive themselves to auction for sale, there may not be much ‘management’ left to do.
Totally autonomous vehicles may not need to go to auction. They could drive themselves to potential buyers, who will probably be in rural areas where operators cannot viably offer ride-on-demand services.
The fleet leasing industry is in good health at present. Huge demand from its traditional customers – medium and large fleets – and its newer customers – consumers and smaller businesses – have driven recent growth. In the short-to-medium terms the growth opportunities will be immense, as more consumers and small businesses opt for the elegant simplicity of pay-by-the-month-and-hand-it-back leasing, rather than having to stump up cash to buy a car then deal with the used car market to sell it.
The industry has benefitted from the move from ownership to usership, and as the sharing economy grows and autonomous vehicles arrive, many businesses will decide they don’t always need exclusive use of every vehicle, just guaranteed rapid access to transport that will get their employees from A to B.
This takes us into the world of ‘mobility solutions’. Whilst some fleet leasing companies are “monitoring developments in this area” (which might well be a euphemism for “we aren’t sure anything is going to happen here so will just carry on doing what we do”) others are building and introducing solutions.
Many business vehicles cover 20,000+ miles pa on mission-critical journeys. Here a dedicated company vehicle is essential and the cost per business mile is low. Some company cars travel relatively few miles each year and here the real cost per business mile is rather high. There is scope here for leasing companies to sell personal lease schemes via employers, something that was trialled without much success 20 years ago but which may have more success now. Because once vendors start knocking on the doors of fleet managers offering mobility services that slash the cost per business mile, those fleet managers will sit up and take note.
Every element of mobility services already exists – company cars, rental cars, car clubs, buses, trains, aircraft, corporate car sharing, corporate taxi services, even bike hire – but they are not yet joined up. Employees need to be offered the optimal mix of transport modes for each journey, with expenses being managed automatically and with the flexibility to make changes mid-journey, in real time, if, for example, a train is cancelled.
Whilst they are perfectly placed to build these services, most fleet leasing companies have yet to do, or even to meet academics or government agencies that work in this area or the young fintech companies that are trying to develop and roll out solutions. One definition of mobility management might be the intelligent merging of the functions currently performed by fleet industry companies, transport operators and travel management companies, to produce solutions where each journey choice is optimised for cost, timeliness and environmental impact. So a good starting point might be to explore collaboration with travel management companies.
Now would be an ideal time to introduce cost-optimised solutions based on traditional products. An employee goes onto a leasing company’s portal, enters their tax rate and annual business mileage, and the system automatically offers the optimum solution. This could be a company car (contract hire), personal car (ECO or PCH), salary increase (for agreeing not to take a company-funded vehicle), mileage allowance or mobility card – all optimised to minimise emissions and after-tax cost both the employer and the employee.
Next let’s consider data emerging from connected vehicles. In the past, data was extracted from the on-board diagnostics port and transmitted using telematics units but soon all new vehicles will transmit vehicle data via factory-fitted modems.
A punch-up is brewing between manufacturers and their customers – most notably the leasing companies – about who owns this data. The BVRLA is very active in this area on behalf of its members. In due course no doubt the industry will have access to the vast majority of data that emanates from vehicles, allowing it to develop much better services. These will include proactive maintenance management assisted by predictive insights gleaned by trawling through real time car data and the leasing companies’ own databases.
Very few data scientist are employed in fleet leasing companies at present. No doubt this will change quite soon as the Big Data revolution unfolds. Clients and drivers will expect to see real time actionable information: last month’s raw data just won’t cut it.
Clients will also demand risk mitigation. A company car veers off the road and kills a pedestrian. Some months later, as part of a police investigation or the ‘discovery’ process in a civil action, the employer is required to deliver the data the car reported before the accident. A data specialist trawls through this and identifies a fault code that was transmitted but not acted upon, which in turn led to the accident. Employers will want protection from this sort of nightmare and will expect their leasing company to deliver that protection.
Another area where leasing companies will need to invest is operational efficiency for themselves and their clients. Technology will be at the forefront of this initiative. Leasing companies will need to embed themselves into their clients’ systems, adding value and making themselves indispensable partners. For example, sharing workflow solutions with clients, so that both companies act as one entity to ensure the client’s needs are met. This will deliver headcount reduction and the deskilling of some tasks. Leasing company employees currently need to be highly skilled yet many of those skills could be embedded in technology so that the right thing happens automatically rather than relying on a knowledgeable person to make them happen. Most likely these changes will need to reflect the fact that fleet and travel management departments will merge once mobility services arrive. And these systems will need to include smartphone-based tools to help fleet managers do their jobs and release them from their desks.
Doing the right thing at the right time, helping the client optimise their business travel, using connected car data in new ways to deliver new services, making sure that things are done just-in-time rather than just too late, striving for ever greater efficiency (ever lower levels of headcount per thousand vehicles managed) – these will mark the difference between the winners on the losers over the next few years.
And as we get go into the era of fully-autonomous vehicles, the industry will carry on doing what it is always done; adapting to client needs. Many businesses will still need properly funded and managed cars and vans, fully dedicated to the company, whilst autonomy creates a lot of opportunity for the industry. But to remain relevant it will also have to deliver mobility services to meet the needs of those employees who don’t need a dedicated vehicle.
And all of this will need to happen in real time, to avoid the disappointment that comes from looking at two-week-old data.
Professor Colin Tourick