The next two years will see a “fundamental shift” in the management of fleets as an unprecedented raft of issues influence change.
Furthermore, said Paul Hollick, chairman of ICFM, the UK’s only independent, not-for-profit organisation dedicated to furthering the education and advancement of car and light commercial vehicle fleet management, at the organisation’s 2019 Annual National Members’ Conference, the role of a fleet manager had never been more “complex and challenging”.
Reflecting on the range of influences, including political and technological as well as the emergence of generation Y in the workforce maybe not requiring a car, he said: “Our industry is changing. And changing very quickly. The new age is already here, whether we like it or not. Globalisation, ‘mega cities’, the connected car, the autonomous car, the new generation not wanting to even own a car with their differing buying patterns – or can even afford one – and mobility-as-a-service.
“Add to the mix world challenges of urbanisation, pollution, natural resource scarcity, congestion, politics, legislation and taxation and the role of a fleet manager has never been more complex or challenging. It’s an agenda that cannot be ignored.
“The ICFM believes over the next 24 months, we will see a fundamental shift in our industry of the likes never seen before.”
Insight into many of influencing issues were provided at the Conference, which was attended by a capacity 200 delegates, including company car benefit-in-kind tax, the transition to a low and zero carbon vehicle future amid a move away from petrol and diesel fuels, connected vehicles and ‘big data’ uses in the fleet industry and fleet funding.
Consequently, said Mr Hollick at the Conference, entitled ‘Fleet Resilience – Managing Uncertainty in the Current Climate’, held on Tuesday (May 21) at the iconic Wembley Stadium in London: “Fleet skills will change and have to change. Manual tasks will cease to exist in their current form and fleet managers’ creative sides will come to the fore. They will need to be innovative, dynamic and strategic.”
As a result, ICFM, which was founded in 1992, would continue to evolve to “work for the fleet world, support its development and change”, said Mr Hollick. “Developing talent and take the industry to the next level…to be the training backbone of the fleet car and van world.”
That included, he said, developing and adapting training courses to “suit the future” including: “Developing training for students that are coming from differing disciplines to fleet especially from the procurement, travel, HR and eventually the mobility space.
“ICFM will develop the fleet/mobility/travel manager of the future. ICFM is here to raise the standards in the fleet industry and extol best practice.”
ICFM qualifications are viewed as the de facto stamp of approval that a person can perform the job of a fleet manager while also making fleet management a fully recognised vocation.
Therefore, said Mr Hollick when employers were searching to recruit an individual to manage what can “often be a corporate’s highest cost, or at least in the top five, costs” they would: “Search out the ICFM qualification when employing a new fleet manager just like they would do an accountant, an architect or a lawyer.”
He concluded: “The ICFM is strong and robust, our focus is always on supporting the industry with its significantly changing landscape.”
A further reflection of the changing world of fleet management was that ICFM was not only training managers to run fleets across the public, private and voluntary sectors, but also more fleet support service employees at motor manufacturers, franchise dealers, leasing and accident management companies and other supply-side organisations.
That trend was reflected in the line-up of Conference sponsors and supporters. The 26th Annual National Members’ Conference was sponsored by vehicle leasing and fleet management company Hitachi Capital Vehicle Solution and the UK’s leading retailer of prestige cars, Sytner Group, and supported by fleet suppliers and ICFM Corporate Investors AX, Epyx, Jaama, Masternaut and TMC (The Miles Consultancy) as well as Selsia Vehicle Accident Centres.
Since launching the Corporate Investor scheme in 2017, 26 organisations have joined and ICFM hopes to double that number in the next 12 months.
The aim of the Corporate Investor programme is to further raise the standards of fleet industry professionals and overcome a possible skills and knowledge shortage inside many employers. Additionally, member businesses also become more closely involved in ICFM initiatives, which include training for employees, the organisation’s annual conference and Masterclasses on key industry issues.
Conference guest speaker was John Motson, one of the UK’s best known football commentators and affectionately known as ‘Motty’, who gave an insight into his long career.
2019 Training Award recipients receive recognition
The memory of former ICFM chairman Tom Madden was recognised at the Conference when his son John – with widow Christine looking on – presented the Tom Madden Career Development Award.
Tom, who died last October following a long illness, was the second chairman of the ICFM serving from 1995 until 2006.
Paying tribute to Tom at the Conference, ICFM director Peter Eldridge said: “Under Tom’s tutelage, ICFM went from strength-to-strength, which was no doubt influenced by his unique blend of old school determination, coupled with charm and business gravitas. He spent more than 30 years with vehicle remarketing giant BCA in a number of sales and customer facing roles and was latterly director, customer affairs.”
Previously known simply as the ICFM’s Career Development Award, the first winner of the Tom Madden Career Development Award, which recognises an organisation that is outstanding in terms of sponsorship and support given to participants on ICFM’s core programmes, was Lex Autolease, the UK’s largest vehicle leasing and fleet management company. Heather Simpson, fleet analyst, collected the award on behalf of the company, which, said ICFM, had “sponsored several tranches of nominees on the popular Certificate level fast track programme. Without exception, the nominees from Lex Autolease have been a high calibre and a product of an organisation that obviously places a high value on ICFM qualifications playing a key role in the service levels offered to its extensive client base”.
The Peter Moxon Award for the Training Achiever of the Year was won by Colleen Palmer, fleet co-ordinator, Essex Police. Ms Palmer was selected due to the “extremely high quality and consistency of her assignments at ICFM Certificate level and, in particular the recommendations for change and policy development – some of which were innovative and designed to improve policy effectiveness and efficiency”.
In the last 12 months 74 people took part in ICFM training at either Introductory, Certificate or Diploma level – some of those have courses to complete, while others successfully passed their exams. A total of more than 400 training days were delivered by tutors during the year. Additionally, ICFM’s updated online Introductory Certificate course continued to prove popular.
ICFM members who achieved a qualification since the last Awards ceremony at the 2018 Conference were recognised at this year’s Conference. Those attending the event were presented with their certificates by Mr Motson.
Introductory Certificate in Car and LCV Fleet Management: A total of 28 people were awarded the Introductory Certificate in Car and LCV Fleet Management, including 13 from the National Crime Agency.
Certificate in Car and LCV Fleet Management: A total of 14 people gained their Certificate. Those who attended Conference were: Jag Kalsi, senior customer service executive, Zenith; Clare Cameron, assistant fleet manager, Danuta Gradkowska-Green, fleet analyst, Alison Bebbington, fleet analyst, Kate Butterworth, fleet analyst, all Lex Autolease; Colleen Palmer, fleet co-ordinator, Essex Police; and Matthew Cox, fleet manager, Hampshire Constabulary.
Diploma in Fleet Management and ICFM Fellowship: A total of three people gained their Diploma, with six more due to complete in the next few months. Attainment of the Diploma provides an automatic upgrade to Fellowship status within ICFM. All three attended Conference: Colin Hutt, fleet manager, Clarion Response; Sean Murphy, group fleet manager, Keltbray Group; and Andrew Paterson, fleet manager, Ministry of Defence.
‘Imminent’ Government announcements to provide tax and Plug-In Grant clarity
Two major announcements from Government, due imminently, will aim to deliver clarity to fleet managers and company car drivers in terms of both future benefit-in-kind tax rates and vehicle choice.
That was the Conference pledge from Phil Killingley, deputy head of the Office for Low Emission Vehicles (OLEV), a team working across Government to support the early market for ultra-low emission vehicles.
Company car benefit-in-kind tax rates have only been published until the end of 2020/21 leaving fleet managers and drivers to make decisions around company car choice without any knowledge of the tax burden during the whole operating cycle of a vehicle, typically around four years.
That lack of clarity coupled with year-on-year increases in benefit-in-kind tax rates has, in turn, fuelled an extension in vehicle operating cycles and in drivers opting out of company cars.
Changes to future company car benefit-in-kind tax rates will take account of the introduction last year of the Worldwide harmonised Light vehicles Test Procedure (WLTP) for measuring car emissions and fuel economy.
The Government continues to review potential changes in company car benefit-in-kind tax to ensure it “strikes the balance between protecting consumers and meeting our climate change commitments”, according to papers issued following its 2019 Spring Statement.
Mr Killingley told Conference: HM Treasury recognises the uncertainty and wants to get an announcement out as soon as possible. Having uncertainty on benefit-in-kind tax rates beyond 2021 is recognised. I’m hoping there will be clarity very soon.”
Meanwhile, financial support for businesses and consumers to acquire ultra-low emission vehicles has been in place through the Plug-In Car and Van Grant schemes introduced in 2011 and 2012 respectively. However, last year changes in Plug-In Car Grant rules saw support for zero emission-capable plug-in hybrids withdrawn with the focus being placed on providing grants for 100% electric cars.
That change has also undermined fleet confidence in the long-term availability of financial support from the Government as it seeks to encourage the transition away from petrol and diesel emission vehicles and towards an electric vehicle and zero carbon future.
Accordingly, the change in Grant rules has heralded a slump in demand for zero emission-capable plug-in hybrids, according to figures from the Society of Motor Manufacturers and Traders, which called the removal of financial support “premature”.
Mr Killingley said: “We will need to exit grants eventually as uptake increases. Grants have been in place since 2011 and supported the purchase of more than 200,000 vehicles. Vehicle incentives will be of continued importance beyond 2020 but the detail is still being talked through.”
He said that an announcement on the future of the Plug-In Grants would be contained within this year’s Spending Review. However, that Review is dogged by Brexit, and therefore, political uncertainty, so there is no information on how many years it will cover – four years is the usual term – or when any details will be announced.
The Government has promised to end the sale of new conventional petrol and diesel cars and vans by 2040. By 2030 – less than three fleet replacement cycles on average – it expects 50-70% of new car sales to be ultra-low emission vehicles (less than 75g/km of CO2) and up to 40% of vans.
However, with just 2.6% of cars registered in 2018 being ultra-low emission and only 0.5% of vans, Mr Killingley acknowledged: “There is an awfully long way to go to drive down emissions.”
Company car demand to spike in 2020/21 as new low tax rates introduced
Company car demand is set to spike in 2020 as lower benefit-in-kind tax rates for plug-in vehicles are introduced that will fuel fleet demand at least temporarily, according to Harvey Perkins, director of HRUX.
In 2019/20 company car benefit-in-kind tax rates on vehicles with CO2 emissions of 0-50 g/km are 16% and 19% for those with emissions of 51-75g/km. However, in 2020/21 vehicles with emissions of 0-50g/km will incur a tax rate of 2-14% depending on zero emission range and those with emissions of 51-74g/km will range from 15-19%.
There were 940,000 company cars on the road in 2017/17, according to provisional figures from HM Revenue and Customs, a 70,000-vehicle drop from 2008/9. However, tax and National Insurance revenue from company cars has risen £460 million over the same period.
HRUX, which provides a range of consultancy services to businesses including on tax, believes that rates of company car tax is now “too high” consequently employees are opting out.
Mr Perkins told Conference: “The rate of attrition of tax rates is too high and the implication is that company cars were a good deal two or three years ago, but are now a terrible deal. Many drivers do not know what the cost of their company car will be until they have to order a new one. They then find out what the tax is and, as a result we are seeing more people opt out.”
However, with benefit-in-kind tax rates on zero emission cars due to reduce to 2% from 16% in 2020/21 – and those for plug-in hybrids also due to also tumble – Mr Perkins said: “Drivers will spend more money in Starbucks than in company car tax if they have a pure electric car. It is really an unbelievable deal.”
With plug-in hybrids also “attractive” from a tax viewpoint, he said: “Those with a 40-mile range will have an 8% tax rate which is one of the lowest rates in a generation. These vehicles will be the answer for drivers until 100% electric vehicles arrive in sufficient quantity.”
As a result, he said: “Company cars with CO2 emissions below 75gkm make sense. 940,000 company cars on the road is now the baseline. I think demand will spike in 2020/21, but then it depends on what the Government does in terms of company car tax rates and that we just don’t know.”
With the Government announcement on benefit-in-kind tax rates from 2021/22 pending, Mr Perkins predicted: “We expect tax rates will rise, but maybe not immediately. If that happens, the number of company cars on the road will, overtime, decline.”
However, fleet managers remain confident that company car demand will remain with 83% of Conference delegates surveyed suggesting that it had a future.
Meanwhile, the Government will this year collect around £27.9 billion in fuel duty and a further £5.6 billion in VAT on fuel duty. However, with the transition to an electric vehicle future that revenue is likely to fall.
Consequently, forecasted Mr Perkins: “We will see some form of UK-wide road charging to recoup that money if it starts to float away with the transition to electric vehicles.”
Advising on alternatives to company cars for employees, Mr Perkins outlined three options: A ‘managed’ Personal Contract Hire plan, salary sacrifice or cash depending on the level of ‘risk and control’ businesses required.
He concluded: “There are options where fleets can operate cars with traditional power trains without high benefit-in-kind tax and stop employees abdicating into pure cash and selecting a four-year-old SUV.”
Future-proof company car schemes by ‘keeping things simple’, says Conference sponsor
Businesses must ‘future-proof’ their company car schemes in the face of anticipated Government changes in benefit-in-kind tax rules to be announced imminently by offering employees a ‘blended solution’.
That, said Paulo Larkman, national fleet consultant at Conference sponsor Hitachi Capital Fleet Solutions, meant “implementing an integrated car policy offering company cars and private cars to employees so they could make a choice. This future proofs your scheme should company car tax rates change”.
Highlighting that by offering such a choice “kept things simple”, Mr Larkman said it would also potentially deliver savings to employees and employers alike.
He urged fleet managers that amid “market uncertainty” to understand “what is happening now” and “have an idea of your direction of travel”.
“Company car tax is high and becoming unsustainable and unaffordable, but the company car is still a valuable recruitment tool according to surveys,” he told Conference highlighting that the two issues were diametrically opposed.
“Getting rid of company cars is the instant knee-jerk reaction, but that does not solve the problem because they are still a valuable benefit. The real issue is the cost.”
Equally, Mr Larkman, said there were “issues” associated with providing employees with a cash allowance in lieu of a company car not least those related to managing work-related road risk.
Consequently, he said there needed to be “an innovative solution that is a perfect fit” and that was a so-called “blended solution”.
Hitachi Capital, he said, had in the light of the 2017 introduction of new tax rules relating to car salary sacrifice schemes and car or cash allowance programmes known as Optional Remuneration Arrangements (OpRA) helped companies implement such schemes. One such scheme was introduced last year at Schneider Electric, which Mr Larkman billed as “the first post-OpRA integrated car scheme”.
A Hitachi Capital analysis of more than 8,000 cars on ‘blended’ company car and private car schemes since the introduction of OpRA had, he said, identified corporate savings of 34% and employee savings of 20%. Consequently, Mr Larkman concluded: “A blend of company car and private car schemes is delivering savings and keeping things simple.”
Nevertheless, said Gareth Whitehead, group corporate sales manager at Conference sponsor Sytner Group: “We are upbeat about the future of company cars and will continue to be. There is talk of change, but we have not seen corporate business reduce.”
Mr Whitehead said he was aware that some major fleets had concerns about what they should do in the future, but reminded Conference that when the carbon dioxide (CO2)-based company car benefit-in-kind tax regime was introduced in 2002 it heralded a “big upheaval” but added: “Company cars remained.”
Plug-in vehicle production must rise to meet Government ULEV targets
A massive increase in plug-in vehicle and battery production is required if the transition to an electric vehicle future is to be achieved to meet Government targets.
That was the message to Conference from Josey Wardle, infrastructure manager at Zero Carbon Futures, an independent consultancy specialising in low carbon vehicle technologies.
Highlighting the low level of plug-in car and van production across Europe as well as battery production, Ms Wardle said that by contrast there were “loads” of vehicle recharging points across the UK – currently at more than 8,200 locations and rising.
In trying to “bust the myths to a zero carbon future”, Ms Wardle said: “Everyone says the UK does not have enough infrastructure, but we actually have loads. The problem is not about numbers, but about convenience, accessibility and availability at a good price.
“Transitioning from the internal combustion engine to electric vehicles is not just about providing more infrastructure because that is not driving sales and is actually causing the infrastructure to be poorly utilised.”
Ms Wardle said utilisation of some recharging points was as low as 4%, which was a “bad situation” and added: “Some of it is going into disrepair because there is not the business model available to manage the network.”
There are some 40 plug-in car models now available in showrooms, and more than a further 20 expected to arrive in the remainder of this year and plug-in van model launches are also due.
However, said Ms Wardle more plug-in vehicles needed to roll of manufacturer production lines and added: “There are not enough for the whole of Europe. More production is needed across the whole vehicle spectrum.”
Asked if the Government’s 2030 target of 50-70% of new car sales to be ultra-low emission vehicles and up to 40% of vans would be achieved she said: “I don’t see it as being possible, but we will be a lot further down the road than we are now.”
Fleets urged to promote to Government a ‘coherent’ clean vehicle transition plan
Fleet managers have been urged to tell environmental law group ClientEarth what they want from Government to ensure “a coherent approach and clarity for a smooth transition to clean vehicles”.
The Conference call came from Dominic Phinn, business engagement co-ordinator at ClientEarth, which has waged a lengthy legal battle against the Government in a bid to improve air quality.
Outlining how the Government had “passed the buck” to local authorities by calling on them to develop air quality plans including Clean Air Zones in potentially as many as 60 towns and cities nationally, Mr Phinn called it “a confusing picture”.
“Local authority plans must be approved by the Department for Environment, Food and Rural Affairs, but Government is not providing clear guidance to local authorities,” he said.
Consequently, a “patchwork” of plans was emerging with, for example Birmingham planning to charge all vehicles that were not Euro 6/VI for diesel or Euro 4 for petrol, including cars and vans, to enter its Clean Air Zone, while Manchester was potentially exempting cars from any charge and Leeds cars and light vans from any charge.
“That makes it very difficult for business to plan when there is a patchwork of plans. It is due to a lack of Government co-ordination. There should be commonality and a coherent approach,” said Mr Phinn.
Concern about the introduction of Clean Air Zones was also expressed by Ms Wardle, who said that local authorities “did not necessarily know what they wanted” as she highlighted that a maxi of Low Emission Zones, Ultra-Low Emission Zones, Zero Emission Zones and Clean Air Zones were all either in place or in the pipeline.
Meanwhile, Mr Killingley acknowledged that Clean Air Zone consistency was “a big issue for fleets”. He continued: “The Government is aware of that. We have a standard framework across the country with different categories of vehicle that will be allowed in without charge. The Government is working on a common IT system to ensure that the system and payment is common across all local authorities.”
Mr Phinn outlined an air quality improvement plan that would include:
- A priority phasing out of the most pollutant vehicles
- Financial help and support for people and businesses to switch to cleaner transport
- Fewer vehicles on the road and those that remained to be ‘the cleanest possible’
- A comprehensive long-term strategy
- A national network of Clean Air Zones
- Regulatory certainty so businesses could plan.
With the Government soon to publish its Environmental Bill, Mr Phinn told fleet managers: “We want a smooth transition to cleaner vehicles because now it is very difficult to plan for the next 12 months let alone the next five years. Whether it is around company car tax or Clean Air Zone we and businesses need some clarity from central Government to make the transition to cleaner vehicles.
“ClientEarth wants to hear what fleet managers want from Government to be able to then put pressure on Government to get this coherent approach for a smooth transition to clean vehicles. It is a business imperative.”
Looking at the continuing debate around future company car benefit-in-kind tax and Plug-In Car and Van Grants, Mr Phinn added: “If the right incentives were in place and ultra-low emission vehicles were of equal cost to internal combustion engine vehicles then there would be no need for Clean Air Zones.”
Hydrogen is the future of electric vehicle mobility, says Toyota expert
Hydrogen is the long-term future of electric vehicle mobility with battery electric vehicles providing “a quick fix” to the ongoing global air quality issue, according to Jon Hunt, manager, alternative fuels at Toyota (GB).
And it would appear that many fleet managers agree with him as an end of Conference delegate survey revealed 34% thought hydrogen would be the primary power train in the next 10 years with 46% believing electric battery and the remainder petrol or diesel. That compared with just 11% backing hydrogen in a start of Conference survey.
Vehicle electrification was “essential”, Mr Hunt told Conference explaining that there were 13 million Toyota hybrid vehicles on the world’s roads and they had saved 100 million tons of CO2 versus comparable petrol engines in the last 22 years.
However, with the world’s motor manufacturers’ transitioning to ultra-low emission vehicles at varying rates some faced significant fines from regulatory authorities if they failed to meet international standards, he said.
Consequently, Mr Hunt claimed that battery electric vehicles would reduce emissions and were “a quick fix”, but significant challenges needed to be overcome including: Vehicle range, battery charge time, vehicle cost, battery life and resources, recycling, infrastructure access and power station emissions.
By contrast, he said, hydrogen had numerous advantages including being emission-free and non-toxic, there was an inexhaustible renewable supply, many sources and it could be stored indefinitely. What’s more the energy density of hydrogen would deliver vehicle range efficiency.
Toyota launched its 154 bhp zero-emission Mirai hydrogen car in Japan in 2015 with a range of around 300 miles, a refuelling time of up to five minutes, a top speed of 111mph and a 0-62mph time of 9.6 seconds. It subsequently introduced the car in the UK with 109 models have been registered to date. The UK currently has 11 hydrogen refuelling stations with a further five scheduled to open in 2019/20.
Today the Mirai costs £66,000. However, that cost equated to a 95% drop when compared with the price of the prototype and by the mid-2020s a range of different hydrogen fuel cell vehicles was likely to be available at different price points with whole life costs similar to internal combustion engine vehicles
Mr Hunt concluded: “Toyota has a clear vehicle roadmap and it is not about one vehicle type. Battery electric maybe suitable for small vehicles, but hydrogen fuel cell will be the solution for higher duty vehicles and those travelling high mileages. The transition to full electric power trains will take up to 30 years and will go through hybrid and plug-in hybrid, but hydrogen fuel cells are the future powertrain for electric vehicles.”
New Air Index designed to help fleet managers’ select ‘cleanest’ cars
Fleet managers have been urged to use a newly introduced Air Index to identify the ‘cleanest’ cars for their businesses because the results from regulatory testing regimes are “not a good basis for decision-making”.
The Air Index, which was initiated by UK-based Emission Analytics, is an independent vehicle emissions rating for cars from A (the best) to E (the worst) that provides the on-road urban nitrogen oxide (NOx) emissions using the same independent test on every vehicle, to show the relative impact a specific vehicle has on air quality.
Nick Molden, founder and chief executive of Emission Analytics, told Conference that Jaguar Land Rover was the first motor manufacturer to use the Air Index rating in marketing material. It is using it to promote the Jaguar E-Pace, which has an A rating.
“We are getting Air Index labelling into dealerships to sit alongside official energy vehicle labelling,” he said.
Mr Molden believes that just as the European New Car Assessment Rating (Euro NCAP) with its one to five star rating launched more than 20 years has provided fleets and private buyers with an easy to understand system for measuring the comparative safety of vehicles so the Air Index can do the same in terms of identifying ‘high’ and ‘low’ NOx emitting vehicles.
More than 200 vehicles have been rated to date with, for example, the Land Rover Discovery 3.0 diesel being given an A rating and the Renault Clio 1.5 diesel an E rating.
“Generally the bigger the vehicle the cleaner it is,” said Mr Molden. “This challenges the notion that downsizing is the route to lower emissions.”
Mr Molden believes there is both “confusion and a lack of trust” in emission ratings provided by the Worldwide harmonised Light vehicles Test Procedure (WLTP), which was introduced last year, while the related Real Driving Emission standard is due to be fully implemented from September.
“Fleet must make investment decisions now, but the new regulations are complex. If it takes three PHDs to understand what is going on that does not breed clarity,” said Mr Molden.
With a lot of patience, fleet managers can look into the WLTP data and find the cleanest vehicles. But not many people have the knowledge to digest what is being provided or the patience. There is a fundamental problem with testing to Euro6 emission standards because the information is not provided to select vehicles properly.”
He claimed that many Euro6 emission diesels were in fact ‘dirtier’ than those tested to Euro three or four standards and added: “If all Euro6 vehicles were meeting Euro4 regulations we would not have an air quality issue. There is a fundamental flaw in the approach to WLTP testing and that leaves fleets with a significant dilemma.”
He claimed that “dieselgate” – focused on the Volkswagen Group emissions-cheating scandal – “left a big deficit of trust” for car buyers towards motor manufacturers and added: “WLTP certification does nothing to change that. Euro6 emission standards are not a good basis for decision-making. The Air Index is the result of a loss of trust in the industry and is the currency for everyone buying and selling vehicles. It resolves the limitations and contradictions of Euro6.”