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.
As inflation rises and fluctuates, 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.
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. 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 companies with an international fleet, to receive good and trustworthy information, and to streamline their operations in these countries, for example in terms of powertrains, car policy and processes. The procurement leader can help to setup International and local requirements for the international fleet and subsequently help select mobility providers who can be more of a partner instead of just a supplier. In a divergent fleet environment, that is the added value!