Panel: should fleets feel an immediate pressure to move away from diesel?
The net zero carbon target by 2050 has re-ignited the need to eliminate transport emissions. But should fleet managers really be feeling the pressure to move away from diesel? And how can they navigate the current and future fuel mix? Our leasing and rental experts share their advice
The UK has passed into law a target to cut greenhouse gas emissions to net zero by 2050. This replaces the previous target of at least 80 per cent reduction from 1990 levels.
The UK’s 2050 net zero target was recommended by the Committee on Climate Change, the UK’s independent climate advisory body.
This changing regulatory landscape can put fleets under pressure to move away from petrol and diesel, and towards alternative fuels. But the likelihood is that diesel is still the best option for many fleets.
“Modern diesels still give much better miles per gallon, are much cleaner than many people imagine and remain very strong company cars,” comments Mark Gallagher from Grosvenor Leasing. “We’re not swayed by the sensationalist headlines and take a very pragmatic approach when advising on vehicle choice, and we look at the total cost of operation as well as the emissions.
“In doing so, companies can understand the full impact of their decisions and make choices based on fact rather than speculation.
“Of course, we would like to see faster uptake of electric vehicles, but while their range remains relatively limited it’s not always possible to get a suitable EV for many high mileage users.”
Stephen Greenstreet from Greenfleets Vehicle Leasing advises fleet operators not to panic about anti-diesel sentiment. He says: “If you are a company car driver who has a high annual mileage, diesel is still currently better for your company, your driver and the environment.
“There are new vehicles coming onto the market all of the time that will offer a cleaner but practical way to operate. As companies continue to look at the way they operate company vehicles, they can fit these new lower emission vehicles into their fleet.”
Fleet managers should question where the ‘pressure’ to move away from diesel is coming from, advices Duncan Chumley from Daimler Fleet Management. He says: “Is it a cost decision, or a CSR initiative? Most newer diesel vehicles can still enter clean air zones without penalty. For longer journeys diesel can still be the most efficient fuel – for example diesel would still be more economical than many hybrid vehicles for motorway driving, but a hybrid would be better in the city or for urban driving. How far and where your vehicles are going should be considered.
“Rather than pander to pressure, a policy review should be carried out to see where electric or hybrid vehicles could feasibly be used. Before committing to alternative fuels consider a consultation of the current and future fleet requirements aligned to your mobility objectives.”
Testing the water
Dan Hawkes from Europcar Mobility Group UK believes that the demonisation of diesel has really confused the market, and while regulations are changing, rental can offer a risk-free solution. He says: “It’s important to remember that the current Euro 6 compliant vehicles meet all emission requirements. However, there’s no avoiding the fact that in the long-term diesel will be eliminated. So, for businesses that don’t want to put significant investment into a technology that will be outdated in years to come, the option really is to look at long-term rental.
“This not only means firms can continue to rely on the performance efficiencies of diesel for the time-being, but also ‘try before they buy’ the new drive train technologies.”
A confusing fuel mix
A few years ago, the fuel mix was straight forward; diesel was said to be the most environmentally-friendly and cost effective option for long distances, and petrol for shorter distances. But now the fuel mix has grown, as has the understanding that we urgently need to reduce pollution to address the climate emergency.
Even with electric vehicles, there are many different types; pure electrics, plug-in hybrids, conventional hybrids, range extenders, and so on. There are also a handful of hydrogen fuel cell vehicles on the market, and commercials can look at biofuels and gas as greener options.
To make sense of it all, fleet organisations can consult leasing and rental firms to help them assess the best fuel-fit for their fleet.
“There is no all-encompassing answer to this as the best fuel fit will vary from company to company based on a number of factors,” comments Mark Gallagher.
“This is one of the reasons we set up our 0Zone service to help fleets move to alternative fuels. We look at the whole remit including where drivers are operating, what the re-fuelling/charging infrastructure is like in their area, the types of vehicles that would best suit the drivers, and what the vehicles are used for.”
Duncan Chumley says: “There are a number of factors to consider when thinking about the fuel mix. Firstly access to fuel is important. There is no use transforming your fleet to solely hydrogen powered vehicles if you do not have a ready supply of hydrogen to fuel them.
“A fleet consultation aligned to the business’ growth and strategic objectives will paint a clearer picture of what vehicles and possible alternative fuels should be used.
“Your fleet is like a tool box; vehicles should be assigned correctly to the relevant usage to drive the best results. A “one size fits all” approach will not drive efficiencies.”
Stephen Greenstreet agrees that speaking to professionals is the best way to get correct advice. He says: “Consultation is the only answer, fleet operators do not currently have all of the answers to what fuel type is best for each of their drivers, but leasing companies and some leasing brokers like Greenfleets do have this experience. To look at this properly you need to look at each driver’s typical journey type, mileage, duration, destination and how long the vehicle is parked in a particular area.”
Adopting alternative fuels
Europcar’s research into fleet usage of alternative fuels found that 45 per cent of businesses are planning to adopt electric vehicles by 2020. The largest sized organisations (500+) lead the way, with 67 per cent looking to add electric vehicles to their fleet. In addition, 21 per cent of those with fewer than 10 employees also intend to make the switch.
Hybrid vehicles are part of plans for 37 per cent of those surveyed, but come joint top with electric among firms with 250-499 employees (50 per cent). And at the moment hydrogen is the least popular alternative fuel, with only 22 per cent of businesses aiming to have them on fleet by 2020.
For smaller firms, there is still some resistance to adopt alternative fuels, with 42 per cent of those with fewer than 10 staff not committing to having any alternative fuelled vehicles by 2020.
Dan Hawkes believes this is down to a lack of knowledge and understanding of new drivetrains. “Europcar Mobility Group UK has been actively involved in a number of initiatives that help fleet and mobility managers understand the future potential of new motoring technologies,” explains Dan.
“Right now, it’s all about giving businesses hands-on experience of new technologies – whether that be rental by the day or hour as a ‘try before you buy’ experience or educational workshops.”
Maintaining the fleet
For fleet organisations, especially smaller sized ones, perhaps the most time‑consuming and burdensome aspect of looking after a fleet is making sure vehicles are fit for the road through servicing, maintenance and repair (SMR).
Mark Gallagher explains the issue: “It’s very rare for any company to have the skills, experience and time to properly manage their service, maintenance and repairs – nor the agreed labour rates and national infrastructure with pre-agreed discounts to support it. This is why many businesses end up signing off invoices without really knowing if they are paying the correct amount or if the work was necessary in the first place.
“It’s also not just about the costs, as poorly managed service, maintenance and repairs can lead to increased vehicle downtime and can have a negative impact on your business when vehicles are off road longer than they need to be.
“When we talk to customers about this, the question is generally around ‘risk’. Do you want to fix your SMR costs as part of a monthly budget within a contract hire rental, or would you prefer to pay-as-you-go, with a consolidated invoice at the end of each month and Grosvenor’s qualified maintenance team managing the maintenance for you.”
Stephen Greenstreet says: “When leasing a vehicle, you have the option to include a full service and maintenance package that takes away SMR problems and fixes your costs for the life of the lease. I am a strong believer that if you lease a vehicle you should include this package. Why have a vehicle or a fleet of vehicles that you have no control of maintenance cost on?
“Leasing companies obtain better hourly rates with service centres and it also avoids unnecessary work. A few of the main leasing companies include a no quibble tyre policy which not only covers fair wear and tear but also accidental damage which – with the amount of pot holes on our roads – is an unknown quantity.
“Another thing to bear in mind is that the car is owned by the leasing company; if you have a maintenance contract then that is also the leasing companies responsibility. In the event of a warranty dispute with a manufacturer the leasing company will deal with the manufacturer to ensure the best outcome, saving you time and money.”
Keeping vehicles on the road
Duncan Chumley further highlights the benefits of SMR contracts: “A good SMR package will include downtime management, planning the service and repairs around your convenience. Your vehicles are the enablers for your business so keeping them on the road is vital.
“SMEs often struggle with servicing and maintenance because they go directly to the cheapest suppliers. Issues can then arise when third party repair networks are used instead of manufacturer approved ones. Key software updates can be missed and non-manufacturer approved parts can diminish vehicle efficiencies.
“Leasing companies are experts in their field so will prevent over charging as well as ensuring only maintenance that is necessary is authorised.”
There is also the option of eliminating the SMR problem entirely when using a rental strategy. Dan Hawkes explains: “Rentals give businesses access to relatively new vehicles which not only deliver great reliability but also puts the latest motoring tech in the hands of drivers.
“The Europcar Advantage solution, which provides vehicles for long-term rent of three months or more goes one step further, providing brand new vehicles. And they are supported by a dedicated team to handle any maintenance issues if they do arise.”
The future of fleet management
The above discussion demonstrates how fleet management has evolved in recent years. But the fleet landscape is constantly changing, and the conversation around fuel, technology and mobility will further advance. So what will the future fleet management role involve?
“There are a range of pressures impacting the future of the fleet management ranging from technological, environmental, legal and ‘Mobility Solutions’– the latest buzz word in our industry,” comments Duncan Chumley. “As vehicles become smarter and more autonomous, the way we travel will change; fleet management will become mobility management.
“Efficiencies will come from our ability to manage Big Data and provide better insights into fleet data. Leasing companies will be expected to be the all-seeing and all-knowing, meaning greater relationships with manufacturers will be key to understanding the changes with vehicle technology.”
Stephen Greenstreet believes that fleet organisations will have to rethink policies so that they are more tailored to the business. He explains: “There will always be a need for fleet management, but not as we currently see it. Companies will have to re-think their current fleet policies and not just use the one size fits all solution they currently have, they will need to look at a blended fleet policy that covers the individual circumstances of all drivers which will help them reduce their CO2 output and ensure the drivers are using the right type of vehicle for the job it is required to do.”
Discussing how the role has become more tech dependent, Mark Gallagher comments: “Technology is having a massive impact on how we manage our mobile workforces and how they communicate. The millennials are driving this because they are tech-dependant. When the older generation within the UK workforce grew up, there was a sense of wonder with technology. In other words, ‘wow – can the system actually do that for me with regards to my vehicle fleet’. Now, it’s more a case of, ‘that’s fine, but why can’t it do this – because that’s what I need it to do.’”
Research into business mobility commissioned by Europcar Mobility Group UK earlier this year found that there is a belief amongst transport decision makers that the changing mobility landscape in the last 12 months is having a real business benefit. Dan Hawkes explains: “The top benefit, according to 35 per cent of businesses, is a reduction in travel-related costs. This rises to over half for firms with a workforce of 250-499 and for those with 100-249 employees. Nearly a third (31 per cent) of respondents said the changing landscape is reducing the environmental impact of travel. This is the case for over a quarter (27 per cent) of businesses with 10-25 employees, rising to 56 per cent among those with staff of 250-499.
“So what we believe is happening is that fleet managers are expanding their knowledge and skill-set to encompass all forms of mobility, as well as broadening their remit on behalf of their employers to address the wider impact of transport on both their own business and the environment.”
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Graph 1: fleet management activities
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José Miguel Fernández Gómez
I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.