Return to tender: Why going regional now is a better option than the pan-European approach

After a decades-long slumber, inflation is back. But inflation is doing something else: it’s amplifying a trend towards regionalization of fleet management – and fleet tenders – across Europe.

In international fleet management, there’s a strong trend towards the bigger playing field. Multinationals often organize their national fleets on a regional, continental and if possible, even global scale. Because greater scale provides opportunities to rationalize, to economize.

That works best in a world in which not just fiscal and economic policies, but also cultures and trends are converging. The EU is perhaps the most effective example of such an environment. But even in the EU, regional differences persist. The monetary policy of “Euroland” is set by the ECB in Frankfurt. But the EU has plenty of member states, mostly in the east, who retain their own currencies, and with it their full monetary as well as fiscal autonomy.

Pro-active banks

As inflation rises, central banks are becoming more pro-active than they have been for years, adjusting interest base rates to defend the economies of their countries. In Poland, the name of that interest base rate is WIBOR, in the Czech Republic it’s PRIBOR, and in Hungary BIRS.  And so on.

As inflation and interest rates differ across Europe, the argument for regionally tailored fleet management increases. There is a noticeable trend to launching fleet tenders on a regional level (say, Central Europe) rather than on a pan-European one. Why? Several reasons:

   Corporate fleets get an outcome customized to a particular region’s monetary and fiscal situation.

   Regionally focused fleet management allows a company to create local “ambassadors”, who in turn generate local support for any given direction.

   Local preferences for services or certain brands, show that a different approach tailored to the region creates more support to foster the company policy amongst employees.

Supplier models

Some fleet supply models even explicitly cater to the advantages of regional tendering and management, by specifically selecting two suppliers: a pan-European one, and a regional one.

However, the recent rise in inflation is not the only reason East and West are divergent within Europe, nor the first. “One major difference is the attitude towards electrification,” says Business Lease International, which specializes in Central Europe. “As electrification accelerates in Western Europe, it faces a different pace in Central Europe. Right now, while electrification is gaining market share, that is really widening the gap between how one should tender for and manage fleets in, say, Poland and France.”

The different speeds at which EVs are introduced are a sign of wider cultural differences. Another example is Mobility. “In some progressive Western European markets, a mobility budget would be a status symbol, whereas a petrol-guzzling luxury vehicle as a company car is now frowned upon. In Central and Eastern Europe, where there is still a strong preference for the freedom of having your own vehicle, it’s still very much the reverse.”

Its own pace

Things are changing in the wide swath of Europe from the Baltic to the Black Seas, but each market has its own pace and its own dynamic. “That’s why it is so important for our customers that we, as specialists in Central Europe, can advise them on how to streamline their operations in these countries, for example in terms of powertrains or car policy.”

In fact, Business Lease proudly claims to have shaped the corporate vehicle leasing market in Central Europe. “When we entered the region in 1996, the only option available was financial lease, which represented the majority of the corporate fleet market. Now, operational leasing is widely accepted as an effective way of managing a fleet.”

Decades later, Business Lease is well and truly at home in Central Europe,  where it is among the top five of the largest lease companies.

Elias Drakopoulos

“Our aim is to be the most customer-centric mobility management company in the Central European region”, says Business Lease CEO Elias Drakopoulos. “We’re doing this by knowing our customers best and being the go-to expert for Central Europe.”

In a divergent fleet environment, that is precisely what customers are looking for.

Central Europe is getting ready for electric cars, and so should you!

It’s a sign of the times: the no. 1 most leased car brand in CE, Skoda, has announced the launch of Enyaq iV, the first fully-electric business model of Skoda. It is slated to hit the market in late 2020 and it is proof, if proof be needed, that Central Europe is getting ready for plugged-in mobility. But is the required infrastructure available and are governments following with incentives to promote EVs?

Let’s get this out of the way first: the share of electric cars on the roads in Central Europe may be low, but even in the most electrified European markets the numbers still struggle to hit the 5% market share.  Of all cars on the roads today, 0.04% are electric in Poland, 0.56% in the Czech Republic, 0.10% in Slovakia, 0.20% in Hungary and 0.06% in Romania. Download the fact sheet.

Adding EVs to your fleet requires a tailor-made approach. The experts at Business Lease can help you take the steps to order and manage your first battery-electric or hybrid vehicles.

The future is clean mobility

These numbers need to go up and they need to do so relatively fast. The European Commission targets emission cuts in passenger vehicles of 50% by 2030[i] as part of decarbonization of the wider economy. This cannot be achieved without corporate fleets.

Car manufacturers have started churning out plug-in hybrid and battery-electric vehicles in huge numbers and they are no longer limited to premium segments.

Buying EVs

Price is still an obstacle to EV adoption, though. Even a modest Opel Corsa-e has a price tag of just under PLN 130,000 in Poland, compared to just over PLN 50,000 for its petrol-powered sister. Getting fleets to add plug-in hybrid battery-electric vehicles to their offering without tax breaks and other financial incentives is difficult and governments in Central Europe have understood that.

Romania, for instance, put a scheme in place to give grants for buying electric vehicles. Slovakia, for instance, subsidizes plug-in vehicles[ii] and the Czech Republic allows municipalities to apply for subsidies to buy cars with alternative fuels.

More is being done on the tax front, though. All five Central European countries do not levy any motor vehicle tax and/or registration tax with some adding additional benefits like free parking while an EV is being charged.

Charging network in Central Europe

Having an EV is one thing, charging it is another. Charging networks can be sparse in parts of Central Europe, particularly away from motorways and cities, but they are expanding. The Czech Republic already has quite an extensive network and they are still planning further increase as to avoid being stranded with an empty battery in more distance regions from the big cities.

However, surveys have shown that most EV drivers charge their vehicle at home or at the office, indicating that’s where chargers are really essential. Fortunately, prices for EV chargers are going down and Business Lease has partnerships with experienced charger manufacturers in all Central European markets.

Various countries also give grants to refund part of the installation costs. This is the case in Romania, where the government refunds up to € 30,000 if you install a charger of more than 22kW. The Czech Republic and Poland also have incentives for EV chargers.

Business Lease set up a Mobility Expert Team five years ago, as a way to experiment with new mobility solutions together with clients and suppliers. One of its core missions is a focus on alternative mobility sources and CO2 footprint reduction.

Business Lease is a car leasing company operating in the Central European region and located in Czech Republic, Hungary, Poland, Romania and Slovakia. Business Lease also operates on an international level and we are happy to provide you with further information on full electric and hybrid cars in your countries.

Get in touch with one of our International team members for more information.

Download the fact sheet  Here