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24 Mar 20

COVID-19: North American fleets “better prepared than last year”

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The coronavirus was a bolt out of the blue, but North America’s fleet and leasing industry has proved remarkably resilient, says Bill Elliot, Executive Director of AFLA: “We’re better prepared now even than a year ago.”

Even a few weeks ago, could have predicted the speed and severity with which COVID-19 has shut down the US economy – including their own industry. 

As the coronavirus pandemic hits home in North America, how is the fleet and lease industry reacting? Here are some important industry voices from the two main trade organisations, AFLA (the American Fleet and Leasing Organisation) and NAFA (the North American Fleet Association).

How are automotive and fleet companies reacting to the measures taken against the outbreak in North America? 

“Fleets are in the front line. We have to comply before the general public,” says Katherine Vigneau, Director of Professional Development at NAFA. “Our members are stepping up in a big way. Our West Coast fleet managers may have been amongst the first to react, but we’ve heard of heroic measures from coast to coast, with fleet managers working 12-plus hour days.”

A lot of what can – and needs – to be done is about mitigation, says Mr Elliot (AFLA): “Across the board, the overall message is safety and awareness. Of utmost concern is the safety of our members’ employees, customers and business partners.”

“In terms of awareness, companies throughout the industry are doing what they can to help flatten the curve – protecting employees and customers alike. And each day brings new information.”

What are the consequences of the crisis for fleets, leasing, mobility and the automotive industry in general? 

“We’re learning of manufacturing plant closures, which will impact delivery times. That in turn will impact maintenance cost, resale values, even MPG,” says Mr Elliott. The pandemic will impact all aspects of the fleet and leasing industry. But the full consequences will only be known once this is over, he says. 

There is one saving grace, though: “Fortunately, the industry has been moving to more automation and innovations, in order to enable processing registrations online, electronic payments to vendors, insurance cards on mobile devices, etcetera. Because of these advancements, we have been better able to support our clients and drivers even than just a year ago.”

Ms. Vigneau agrees that it’s too early to measure the impact of the crisis: “Our fleet managers are way too busy right now to respond. First observations: fleet is an essential service in most organisations. Sanitation of vehicles. repurposing of vehicles and overall flexibility are all critical.”

“This crisis highlights the need for solid fleet policies that address emergency preparedness,” says Maria F. Neve, manager at Mercury Associates, a fleet management consulting firm and member of NAFA. “We’re watching a paradigm shift in how businesses function. The push for shared and mobility assets will become stronger. Lowered interest rates will make leasing even more attractive. When combined with mobility services, this will advance the practice of only paying for what one uses.”

How will the coronavirus crisis impact fleet and leasing in North America long-term?

“A missed cycle of vehicle deliveries, the potential impact to the resale market – which could actually improve, since new vehicles will be slow to the retail market – may result in delays of carbon-neutral goals,” Mr Elliott thinks. 

Also, fuel prices, interest rates and the availability of parts may be impacted. But all of that’s hard to put together right now. “Only time will tell. Perhaps protecting us from future pandemics will be a new business opportunity. Because it was clearly a need that was not being met.”

“Vehicles will take even longer to order, until OEMs ramp up production again. That will affect fleet spending and lifecycle management,” says Ms. Neve. “Global supply chain disruptions mean longer in-service cycles for current vehicles, thus higher maintenance and repair spend.”

“The importance of online ordering during quarantines and lockdowns will propel last-mile delivery fleets into the spotlight. The shift to moving fleet-related activities online has begun, and must continue in order to survive the next crisis.”

Authored by: Frank Jacobs