United States of America
The United States of America (USA), commonly known as the United States (U.S. or US), is a country primarily located in North America. It consists of 50 states, a federal district, and five major self-governing territories.
The U.S. fleet market currently operates in a low-interest and low-inflation environment, and meeting the country's safety and fuel economy standards will require substantial investment by OEMs. These higher costs are passed on to end users, which will stimulate cost savings innovations and funding alternatives. Moreover, technology is seen transforming fleet management and the trend towards integrating business processes are seen accelerating.
Open-end leases are more commonly used in the country. Although it gives the lessee more flexible terms, it does put more pressure on them when it comes to taking on depreciation risk.
As such, cost containment remains the #1 priority for fleet managers everywhere and one of the most common strategies is to extend the vehicle replacement cycle. Downsizing will remain a fleet trend in the US, in class size, engine displacement and fleet size. Low fuel prices could see volatility shortly as governments are under pressure to increase fuel taxes.
Chapter 1: Economic and business environment
2022 population: approximately 335 million
|Major cities|| |
Tha main language in the U.S. is English with 229 million speakers
|Unemployment rate|| |
3.5% (December 2022)
|Main industries|| |
Energy, manufacturing, transportation, health care, agriculture
|Interest rate|| |
4.35% (December 2022)
|Fleet Maturity Index (scaling)|| |
Recovering from the COVID-19 pandemic era, overall production rose 4% in 2021 to 9.17 million units, being 1.6mn passenger cars and 7.6 commercial vehicles. (source: OICA)
|Political key info|| |
The United States is a federal republic in which the president, Congress, and federal courts share powers reserved to the national government according to its Constitution.
The executive branch is headed by the President and is formally independent of both the legislature and the judiciary. Legislative power is vested in the two chambers of Congress, the Senate and the House of Representatives. The judicial branch (or judiciary), composed of the Supreme Court and lower federal courts, exercises judicial power. The federal government's structure is codified in the Constitution.
Two political parties, the Democratic Party and the Republican Party, have dominated American politics since the American Civil War, although smaller parties exist such as the Libertarian Party, the Green Party, and the Constitution Party.
6.5% (December 2022)
Chapter 2 : Automotive market, segments & sales
|Total Car park|| |
|New vehicle registrations (Cars, LCV, Trucks)|| |
|Top 5 brands (total market)|| |
1. General Motors (2.26mn, 16.2% market share) up 2.5% y-o-y
source: MarkLines Data Center
Popular luxury brand in the US is Mercedes-Benz, and for electric vehicles, it is Tesla.
|Model preference top 5 (total market)|| |
source: MarkLines Data Center
|Dealer network (including fleet dealer network)|| |
Approximately 16,500 nationwide
|Used car market/renewal cycle|| |
The used car market in the U.S. is large, seeing approximately 40 million units sold per year
Chapter 3: Company car market
|Total Fleet Park (company cars)/Fleet penetration in total fleet sales|| |
As of January 1, 2021
Automobile fleet: 3.4 million
source: Bureau of Transportation Statistics
The breakdown for fleet type is corporate (38%), government (36%), rentals (26%)
|Evolution fleet sales (last 5 years)|| |
In 2021, light & heavy commercial vehicles sales fell 5.7% to 11.4 million units from 12.1mn (source: OICA)
Fleet sales represent approximatly 15% of the total.
|Top 5 fleet brands (fleet market)|| |
Pickups are of high demand, mostly from Ford, Chevrolet, and Ram.
|Fleet Model preference top 5 (fleet market)|| |
1. Ford F-150
Chapter 4: Taxation & legislation
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Chapter 5: Car policies
The main ingredients of today's Car Policy
- Fuel Efficiency and Cost Control meastures are key, but also Health and Safety are of concern for fleet managers
- This is also true for Environmental and Sustainability issues but too a lesser extent than what is usually seen in Europe
- Return Vehicle Condition stipulations are also in policies, of which drivers are informed and advised on what to do and what not to do when using the asset.
Like many other countries, keep in mind that the lack in microchips, parts, and components is affecting policy creation in the U.S. (delivery schedules, contract length and renewals). Although it depends on various factors, supply should come to par with demand in early 2022.
Chapter 6: Funding methods
Among the main players covering Automotive Finance in the United States are Ally Financial (Michigan, USA), Bank of America (New York, USA), Capital One (Virginia, USA), Chase Auto Finance (California, USA), Daimler Financial Services (Stuttgart, Germany), Ford Motor Credit Company (Michigan, USA), GM Financial Inc. (Texas, USA), Hitachi Capital (Tokyo, Japan), Toyota Financial Services (Aichi, Japan), and Volkswagen Financial Services (Brunswick, Germany). More recently, Stellantis inked a deal in 2021 to start captive finance in the US.
Lease v.s. Owned Fleet
Business Fleet (25% cars, 75% trucks)
- cars 72.6% leased
- trucks 43.5% leased
Government Fleet (41% cars, 59% trucks)
- cars 2.4% leased
- trucks 3.5% leased
The risks associated with operating a fleet include the expenses for fuel, for insurance cover, for service, for maintenance, for repair and for the residual value. The range of methods available for funding corporate vehicles is:
- outright purchase : the fleet user acquires their vehicles via their own available cash reserves or via an bank finance loan. All the risks mentioned above are entirely for the account of the user.
- finance lease : a finance lessor provides the funds for the acquisition. usually, there is a residual value installed in the financial package. The fleet user enjoys any surplus on that RV upon the vehicle's eventual disposal or suffers the deficit if the vehicle is sold less than the estimated RV. SMR costs and risks are for the fleet user.
- full service leasing or operating lease : an operating lease provider supplies the vehicle, but retains the rights of ownership. He usually provides full SMR coverage, and takes the RV risk. Other services offered can include: vehicle insurance cover, accident management, fleet reporting, consultancy advice and replacement car service.
Chapter 7: Fuel
The U.S. fleet users (or their service providers) nowadays have a very good fuel and driver management process in place. Only some 4% of the vehicles opporate on diesel as the price of these to fuels differ very little. Fuel represents approximately 35% of TCO.
May 16, 2022
Average gasoline price per liter: US$1.23 (world average is US$1.36)
Average diesel price per liter: US$1.48 (world average is US$1.32)
Average electricity price per kWh Households: US$0.16 (world average is US$0.13)
Average electricity price per kWh Business: US$0.12 (world average is US$0.13)
Chapter 8 : TCO components
True fleet costs are most efficiently determined by collating all of the operating expenses involved in the vehicle's use during the primary period. Those expenses come in categories such as fuel expenditure, taxes, maintenance and repair. The current TCO methodology is predictive: it assists fleet buyers in their decision-making by helping to determine which vehicles are likely to be the most cost-efficient over their primary period of use. The U.S. has made significantly more progress in the actual management of the drivers that has an impact on the actual Total Cost of Ownership.
U.S. TCO :
- Maintenance tires & rental represents 8%
- Collision & safety 6%
- Fuel 35%
- Depreciation 39%
- Funding & management taxes 4%
- registration & tax 6%
- other 2%
Chapter 9: Safety, insurance and telematics
- Insurance represents 6% of the TCO in the U.S.
- Safety isn't an option in the corporate fleet management, it is a given. In North America the regulations in the green and safety issues mean that driver training is an absolute must, including DoT compliance (ensures that drivers in safetysensitive positions are regularly tested for drug and alcohol use).
- Telematics provide connectivity services to fleet managers and leasing companies to enable them to consult the economy score and mileage of their car park on a webpage or as data feed into the system of a fleet management company.
Chapter 10: Environment
In North America (both Canada and the Unites States), there is a marked increase in client interest in battery-electric vehicles, largely driven by corporate sustainability goals.
Electric Vehicle (EV) adaption is lower in North America than in Europe, largely due to lower fuel costs and regulation. Still, increased vehicle availability, lower purchase prices, the outlook on TCO parity, growing range and legislative pressure make EVs a feasible option for an increasing number of fleets.
Many fleets in North America have indeed joined the EV100 initiative which strives to reach 100% EV and/or PHEV by 2030.
Financial incentives for EVs typically vary significantly across both the US and Canada. While numerous government incentives do exist, they are often tailored to individual consumers rather than large corporations. Fleet management and leasing companies can assist clients in identifying and taking advantage of applicable grant and incentive programmes to ensure the most cost-effective means to adopt EVs.
Source: Comments from representatives of Wheels, Element and ARI
Moreover, President Joe Biden has proposed US$174 billion in investments for the EV market under the country’s 8-year America Jobs Plan. It includes:
- building a national network of at least 500,000 EV chargers by 2030 which would call for US$5-6bn in investments
- replacing 50,000 diesel transit vehicles and electrifying at least 20% of the country’s yellow school bus fleet (plans to eventually achieve a 100% e-bus fleet).
- electrifying the entire federal fleet, currently estimated at some 645,000 vehicles
A significantly lower counter proposal of some $4bn, however, was proposed by Rebublicans in May, 2021.
• BEV sales are very tax-credit sensitive and with Tesla and
GM reaching their limit, the outlook is less positive than
Chapter 11: Mobility
A trend in the U.S. is the corporate alternative mobility. Fleet drivers are looking at ways to combine the car with other modes of transport, and solutions like car sharing are becoming more important. Corporate carsharing enables fleet to increase the utilization of pool vehicles.
The broad outline of future mobility policies is aiming to cut pollution and congestion, all stakeholders are expecting fewer and cleaner cars, and more and better alternatives. While state and federal governments set standards and promote innovation, it the cities that are the real laboratories for change. L.A.'s Mobility Plan 2035 aims to redirect L.A.'s century-long fixation on the car towards a more multimodal mobility approach. The Mobility Plan builds on L.A.'s metro system (currently used by 1.5 million people every weekday) and alternatives like separate lanes for biking. The plan's Vision Zero aims to radically reduce L.A.'s 36,000 annual road deaths and injuries.
The raising of bridge tolls in the peak period on the San Francisco-Oakland Bay Bridge in California in mid-2010 provides a rare opportunity to assess traffic impacts. Carpoolers who previously traveled for free during peak hours were charged an electronic toll under this variable pricing scheme. On the basis of 29 months of time series data, the introduction of carpool charges had a stronger impact on traffic volumes than did peak period pricing of regular traffic. The estimated short-term elasticity of about-0.30 suggests significant numbers of peak hour car poolers did not travel, switched routes, shifted to public transit, or opted to drive alone. More than half the loss in carpool traffic was estimated to be attributable to the toll increase, a far stronger influence than factors such as rising gasoline prices and unemployment. The estimated elasticity of regular traffic in response to variable pricing was-0.23, an indication that peak period motorists were fairly insensitive to pricing and a reflection of the nondiscretionary nature of many peak hour journeys. It will be important to track trends over time to gain insights into the longer term sensitivity of motorists to variable pricing on natural corridors such as the San Francisco-Oakland Bay Bridge.
Chapter 12: Key trends to watch
- Working from home has been around for a long time but it is a practice that has grown enormously as governments the world over have introduced lockdowns in a bid to fight the coronavirus. Many companies are not only adapting their policies to allow working from home, they’re also downsizing their offices, car parks and vehicle fleets.
- Digital fleet management tools, artificial intelligence applications and data from connected fleets are trendst to watch as they lead to new insights that in turn can help optimise a company’s fleet management.
- New standard in the regulation for Financial Lease Accounting: The U.S. FASB wants a dual model, retaining the existing distinction between finance and operating leases. Under the new rules, lessees will have to bring all leases (including existing ones) onto the balance sheet. This would only apply to longterm leases. Capital and operational leases with a runtime of maximum one year will stay off-balance. The FASB's decision to move forward with a standard that requires companies to include all lease obligations on their balance sheets follows pressure from its global counterpart, the international Accounting Standards Boards (IASB), which had expressed concerns about a lack of transparency on financial statements.
- Although Hydrogen-powered vehicles is still quite new in the country, the trend toward this fuel cell technology slowly emerging in California with a network of some 35 publicly accessible stations. The state is expected to have approximately 1,000 stations by 2030.
- Finally, keep an eye on corporate car sharing.