Car Policy: It is all a matter of emphasis
Car Policies today are far more complete than before. And while Car Policies will have many similarities worldwide by virtue of similarity in purpose and use, there are marked differences in emphasis. In some respects, the U.S. is ahead, in others, Europe.
Let’s have a look at the main ingredients of today’s Car Policy.
Health and Safety
This part of the Car Policy is increasingly important in Europe's corporate car fleets. Powerful legislation now governs the Duty of Care principle across many E.U. countries, so much so that many fleet owners feel morally obliged to protect their employees in the workspace – which extends to the professional use of a company car.
This moral obligation, backed by current or forthcoming E.U. legislation, requires fleet users to apply significant focus upon the Health & Safety portion of their Car Policy. Obviously, U.S. fleet users also care about the safety of their drivers. But Health & Safety is not covered as extensively in most U.S. car policies.
The E.U. uses a number of tax instruments to forcibly steer the type of vehicles purchased towards those emitting lower amounts of CO2 and other pollutants. Emission output is linked to fuel consumption, so there is a clear convergence between controlling the amount of fuel economy and emissions reduction.
Cleverly, CO2-based taxes not only help the environment but are also entirely compatible with corporations wishing to control their fuel expenditure.
Applying BiK taxes based on CO2 emissions encourages drivers to choose efficient engines. This incentive links to fleet users aiming to control the use of fuel – a very high cost in Europe.
That high fuel cost, coupled with ever stricter legislation and a strong sense of moral responsibility to reduce environmental harm, means the 'green' portions of Car Policies are more in focus across Europe than they are in the U.S.
Return Vehicle Condition
The physical and mechanical condition in which motor vehicles are returned is a crucial factor in the value achieved when they are being resold as used vehicles.
A significant segment of large fleet users obtain their light vehicles via an operating lease supplier. These assign a Residual Value (RV) to the asset, assuming that it will be used with care during the period of the lease. If a leased vehicle is returned in a condition considered unsatisfactory by the provider, then any negative impact on the original RV estimate will be passed on to the customer.
For more than a decade, most customers did not adequately control their drivers' use of vehicles. As a result, the 'Unfair Wear and Tear' invoices at the end of the contract increased in both frequency and value. Today, the issue is being addressed. Drivers are advised in the Car Policy on what to do and what not to do when using the asset. They are also informed of the financial consequences of non-compliance.
Both professional corporate procurement managers and competent operating lease suppliers now tend to vary the contract rentals up or down, in accordance with the driver control mechanisms and processes that are evident in the respective Car Policy.
No matter which the acquisition process for fleet cars in Europe, it's financially very beneficial for fleet users to focus on Return Vehicle Conditions, especially is they're acquired via an operating lease.
Naturally, Vehicle Return Conditions are also important in the U.S., but it is Europe's strong emphasis on operating leasing that gives the issue such prominence in the E.U.
Until very recently, Europe generally has lacked strong guidance on the actual use of fleet vehicles. Only now is this becoming a focus.
This lack of focus was the direct result of the emotive aspect referred to earlier. “Whatever you do, do not upset the driver” - that has been a common requirement over the many decades. The company car is considered to be part of the remuneration package, and this significantly changes not only the driver’s mind-set, but also the various departments that control fleets within the fleet user corporate infrastructure.
Happily, this attitude is now changing in Europe, as it has been realised that the driver of a company light vehicle can be responsible for a 15% variation in operating costs.
In the U.S., Car Policies have been focusing strongly on the Driver Management portion, and it has had a significant impact on the fleet operating costs.
The U.S. is relatively emotion-free regarding company cars. Drivers accept that the provided vehicle is a tool required for the job, and that it is an asset to be used correctly.
As such, the U.S. fleet owners and users are well ahead of their E.U. equivalents in the development of Driver Management policies and processes.