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Future of fleets: radical changes coming

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The radical tech evolution that we’ve seen in the retail, entertainment and travel sectors, with the likes of Amazon, Netflix and Expedia, is filtering into the fleet sector, shaking up traditional ways of working.

A convergence of new technologies and greater connectivity is set to reshape the sector, creating new industry players and business models.

According to a study by fuel giant Shell, by 2040, the fleet industry could transform almost beyond recognition.

The “Future of Fleet” report looks at alternative fuels, driverless vehicles, mobility, data and smart infrastructure.

Forty-one percent of respondents said that staying competitive in a changing industry is their biggest challenge covering the main areas of change within fleet management and how fleets can adapt.

It highlights how technology and services are transforming the fleet industry and creating opportunities for companies to enhance their operations, boost efficiency, and stay competitive. 

It also revealed that 62% of fleet managers in the UK are excited about the role new technology will play in the fleet sector, but 38% find it hard to stay in tune with new developments. 

“In the UK, the pace of change in commercial fleets is accelerating rapidly, and we believe the industry will look radically different within the next 20 years,” said Katya Atanasova, Vice President of Shell Fleet Solutions. 

Automation, data analytics, automation,greater connectivity and alternative fuels will require new business models, skills and partnerships between fleet operators, manufacturers, energy and technology providers and start-ups.

Shaking up local shores

Local firm Fleet Elite, specialists in procurement and disposal strategies that maximise the return on assets for their clients’ fleets, has recently re-invented its business model to service the demands from its corporate clients like Checkers, Clicks, Shoprite, Avis, Vodacom and Pick n Pay and banking clients Standard Bank, Volkswagen financial services and Toyota financial services.

As a special services division of DealersOnline it aims to solve problems frequently faced by fleet owning businesses. It has recently worked with WesBank to solve a number of challenges, predominantly the fleet disposal process that is an important part of the vehicle life-cycle and critical component to reducing the whole-life cost of each vehicle in any fleet. 

The price received will vary depending on which disposal method is used, the most effective being based on the type of car and its location, to ensure the maximum return on assets is received. 

For Wesbank, disposing of between 200 and 500 vehicles a month was a massive challenge for the company. 

At the time, the nature of its disposal process limited the exposure of their vehicles to a small audience through live auctions. This meant that fewer prospective buyers were competing for the assets. 

Fleet Elite chose to expose Wesbank’s vehicles to a dealer network, thereby increasing the chance of each vehicle achieving its maximum selling price.

“We achieved, on average, a 12% higher selling price compared to the previous disposal process,” said Mohammed Sader, Business Development Executive of Dealer’s Online. “Our automated processes reduced the average disposal time from 47 days to 6 days.”

“The speed means that there is less free cash flow stuck in stock and we reduced working capital by 300%.

“They combined their ability to develop new technology and services with their intricate understanding of our industry to deliver outcomes I couldn’t have imagined. There is no one else out there who can do what they do,” shared John Loxton, head of fleet management and leasing at WesBank.

There’s no doubt that every corporate business that owned or leased a fleet would experience the same inefficiencies.

Bracing for change

Amid this change, fleets managers need to start assessing and understanding the future requirements of their company in order to build a business case for change.

The report also urges the fleet and transport sectors to work together. It says: “The pace of change makes it hard for even the largest players to guarantee what will come next. As a result, we are seeing many new collaborations between organisations seeking to share advice and develop common standards.”

A first step is to look for partners outside your immediate industry – such as technology, energy infrastructure or consulting – to help test ideas and change the sector.

What’s clear is change is not coming, it’s ever present and agility through partnerships is key to fleet managers when procuring, managing and successfully disposing of their moving assets. Realising the best possible return on investment, depreciation aside, means time is short and the smart money points to models that can address these and many other fleet ownership challenges, now and well into the future.

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