North America- Europe: the same league, a different world
Even though North Americans and Europeans do essentially the same thing – providing cars for their employees – they tend to do it differently. Some examples:
- The biggest difference is without a doubt the NA’s preference for open-end lease or Terminal Rental Adjustment Clause (TRAC). In this scheme, the client is willing to take residual value risk. This has the advantage of flexibility of mileage, at the risk of having to pay the difference between contractual RV and the actual market value. In European lease schemes, the lessor will take the risk on RV.
- Europeans love a user chooser model whereby the employees select the car brand, model and its options. This comes from the fact that cars are offered in Europe as an alternative to salary and can be used for private purpose, in exchange for a monthly contribution (Benefit in Kind). North-American fleets are managed much more like commodities and the assets are usually identical or similar.
- The vehicle base of North-American fleets is focused on trucks rather than on cars. It’s partially due to the fact that, especially the US, has a historic preference for larger vehicles as the distances between destinations are bigger.
- The trend towards mobility is clearly more present in Europe; increasing taxation, city bans and different employee behaviour are key elements that push towards a new model of employee movement. This is not the case in North-America, where alternatives to a car (micro-mobility, but also public transport) are much less present, appreciated and promoted.
- More than 50% of all light vehicles in Europe are registered by a company, whilst this is the case for less than 20% in North America (source: Deloitte). The company car is much more of an employee benefit and a tax tool for the Europeans; employees in North-America will receive a company car only if and when they need one.
Regardless of these differences, when it comes to the TCO, North-America and Europe are pretty similar: depreciation represents roughly 40% of the TCO in both regions, fuel 20%, MRT 15% and insurance, interests, taxes and management fees cover the remaining 25%.
Another similarity that is bringing NA and EU fleets closer to each other, is the impact of digitisation of corporate business models. More and more business is done without having to drive to a client or a supplier, which will impact fleet sizes on both sides of the pond.
As a conclusion, no one expects both markets to merge any time soon. We can however learn from each other: North-American Fleet Managers are much further in the implementation of telematics and connected vehicles than their European counterparts, whilst the Europeans seem to understand better how recruitment and retention can be improved through benefit policies.