7 ways to build a better International Car Policy
If you’re a Fleet, Procurement, HR or Finance professional in an international company, you’re likely to have some experience in setting up an International Car Policy. Then you’ll know it’s a task that is both very important and highly complex, with different regulatory, regional, environmental and social vectors pulling in different directions. Especially if your fleets are spread out either partly or entirely across Central and Eastern Europe. With the right mindset – and expert advice, for example from your leasing supplier – it’s a set of challenges that can turn into opportunities for your fleet and the company. Here are seven ways to do just that.
1. One policy or many?
Multinational fleets all face the same question: one car policy for all, or one per country? The short answer: if you have scale, use it. Having one car policy across all your markets provides clarity, increases efficiency, facilitates sustainability and – last but not least – gives you leverage when dealing with OEMs, leasing companies and other fleet suppliers.
Of course, national differences need to be considered. An effective way to do that is in an addendum that can be changed per country.
2. East vs. West
Differences aren’t just national, often they are also regional. In Europe, there is a great distinction in fleet management practices between West Europe, Central and Eastern Europe and the Nordics for example. In the more mature markets in the West, innovative aspects like electrification and mobility budgets are now regularly included in car policies. In Central and Eastern Europe, the situation is typically less advanced, but generally also fluid and potentially fast-moving.
One stark figure to illustrate the difference: according to recent data from the EEA, The share of EVs (Electric Vehicle) on the new car market in Germany is 26.9%, while in neighboring Poland it’s just 3.6%.
Companies with at least part of their international fleets based in Central and Eastern Europe would benefit from a leasing partner with deep expertise and experience in these regions.
Business Lease offers consulting services with deep knowledge of the markets in Central and Eastern Europe. Click here for more.
3. ESG and CSR: more than nice-to-have
These letter words are not just nice-to-haves. If deployed correctly, they can benefit both your fleet operation and your overall corporate goals. First, a definition. Both terms actually describe the same topic, but from a different angle. CSR, or Corporate Social Responsibility, describes a company’s internal social and environmental targets. ESG, or Environmental, Social and Governance, describes its external social and environmental impact.
Either way, pro-actively incorporating EU emission reduction targets, national EV adoption goals or other CSR/ESG-related objectives can be beneficial in various ways. Firstly, these targets, when pursued correctly, will result in a more cost-efficient fleet. Secondly, they boost corporate image, both among customers and employees – the latter is very useful in the ‘War for Talent’. And finally, it gives you a head start in an irreversible process: regulations regarding emissions will only get stricter.
4. It pays to be specific!
Car policies are general documents, but it pays to be as specific as you can be. For example:
Car levels. Clearly determine which job categories correspond to which car levels, and ensure that the financial framework governing these is detailed and specific.
Vehicle selection. Specify which vehicle types are permitted, and which ones aren’t (typically, this would exclude the largest, most expensive and highest-emitting models).
Fuel cards. Will drivers be issued fuel cards, or will they be reimbursed for fuel purchased for work trips? Fuel cards provide more transparency, but require a certain degree of management (which can be outsourced).
Private use. What is the mileage allotted for private use of the company car, and who can drive it besides the employee? Clear rules reduce grey areas, abuses and disputes.
One of Business Lease’s most popular service is the Car Policy Index, which tracks the price developments for fleets across five key markets in Central and Eastern Europe of a number of key car models. Click here for more.
5. Electrify: yes, but how?
Corporate mobility is fueling the paradigm shift to zero-emission vehicles – in practice, almost exclusively electric vehicles (EVs). But how slow or fast should your fleet make the transition? And should you get battery-electric vehicles (BEVs), or plug-in hybrid electric ones (PHEVs)? How should you address the charging infrastructure issues that arise with electrification? Will your drivers have access to replacement petrol or diesel vehicles for longer distances or private use?
In the right circumstances, fleet electrification can produce huge savings in cost and gains in efficiency. But you need a good overview of the kind of trips your fleet vehicles are used for, of your market’s fiscal environment, of your drivers’ readiness, and other factors on which the success of the transition depends.
If you want to know whether your fleet is ready to electrify, use E-Mobility QuickScan, a tool developed by Business Lease. Just enter a few key facts about your fleet, and the tool tells you how many EVs you can profitably introduce. Click here for more.
Also, it may be wise to include a separate section in your car policy on charging. Cost varies widely depending on the charging location, with charging at home generally cheaper than at work, and both much cheaper than at public charging stations. The policy should stimulate the cheaper options, and set rules for when the more expensive one is justified.
If the conditions are right but the drivers need an incentive to make the change, consider letting them overspend on their company car budget if they choose an EV. For example by 10%, or for a fixed amount per job category.
Every six months, Business Lease publishes an E-Mobility Factsheet, detailing the latest developments and relevant conditions for electrification in five key markets. Click here for more.
6. Optimize fleet and vehicle size
One of the most effective ways of reducing the environmental impact of your fleet (as well as its cost) is to optimize the size of your fleet and the usage of each vehicle. Telematics and data analytics allow fleets to monitor performance and identify under-utilized routes and vehicles. Depending on which provider you ask, this could shave between 10% and 14% off your total fleet cost.
Similarly, and simultaneously, you should consider downsizing vehicle model choice as well. For your LCV fleet as well as the personal cars. Regarding the remuneration vehicles, downsizing can be stimulated by allowing the driver to keep the remainder of the monthly vehicle budget in cash.
So, where’s the benefit? For one, smaller vehicles require less maintenance. And also, lease rate increases will be smaller for smaller vehicles, saving you money when prices go up.
7. Engage with the driver
Cars are not the central element of corporate fleets – people are. So make sure you engage with the drivers, and specify this engagement in the car policy. Driving culture can vary greatly between countries, and may require remediation via driver behavior training tailored to specific markets. By adjusting driver behavior, you can reduce the danger and/or cost caused by speeding, idling, harsh braking and acceleration. This benefits your drivers’ own safety and that of other road users, but it also helps reduce fuel cost and car damage – increasing the residual value of the vehicles. In fact, the difference between good and bad driver behavior may amount to a difference of up to 25% in your TCO.
To ensure drivers are on board with the requirements of having a company car, make sure that reading and signing up to the Company Car Policy and the Driver Agreement is an integral part of them obtaining their company vehicle.
For your International Car Policy to remain effective, it needs to be reviewed regularly to re-align it with changes in both the car market and the labor market. Rely on lease partners like Business Lease, with decades of experience in key Central and Eastern European markets, to deliver the expert advice that will turn this challenge into an opportunity. We take ownership of the issue, we work out a solution with care and respect, and we deliver our services with a smile.