how companies should handle automobile fleets?

Transcription

1 industry brief how companies should handle automobile fleets? Opel C&S on Managing your fleet: Turning a benefit into tool for efficiency AAA AUTO on how companies should handle automobile fleets ARVAL CZ on The TCO phenomenon: Assessing the real cost of a company car CCS Česká společnost pro platební karty on CCS services: the key economic and effective management of company fleet operation costs LeasePlan Česká republika on To lease or to buy: A question of money management

2 Managing your fleet: Turning a benefit into tool for efficiency A company car is seen as an important benefit for employees, a tool that ensures mobility and improved administrative efficiency for a company. At the same time, however, the operation of company cars is a significant cost item for every company. In view of the demands of company car fleet management this agenda should always be managed by a dedicated specialist - Fleet Manager. He is responsible for the complete administrative management of the car fleet, and performs all the activities connected with the acquisition, management, care, renewal and write-off of fleet vehicles. His job description includes in particular selection, purchase, purchase financing, and legal matters related to loans and the use of vehicles by employees or short-term users. In addition to care for the vehicles, his responsibilities include the management of information about the drivers, professional certification, driving licences and so on. Fleet management & Total Cost of Ownership A company planning to replace or set up a fleet faces two fundamental tasks: the selection of the brand and type of vehicle, and the selection of the method of financing. Company vehicles can be paid for by cash, through financial leasing, or through operative leasing it is precisely operative leasing that is currently the most popular method, especially for large companies. TCO (Total Cost of Ownership) can form a significant part of a company s costs and its reduction can have a significant influence on its overall economic results. Monitoring and optimising these costs is therefore an ever more important factor. TCO costs include not only the acquisition value of the actual vehicle and the costs for its operation, but its net book value meaning the price for which the vehicle can be sold at the end of its operational period is also very important. This difference between the acquisition and sale price, meaning the drop in its value, is the most important parameter when evaluating the total costs for the acquisition and operation of a vehicle. The TCO is also influenced by fuel, financing, insurance, servicing and tax costs.in view of the significant fall in the value of the car in relation to overall costs it may be that a car that was acquired at a significantly lower price can actually end up being more expensive for a company than a car with a higher original acquisition price. The reason for this is the high operating costs of a cheaper car compared to the more advantageous, respectively lower, operating costs of a more expensive car. In particular the net book value of a more expensive car does not fall so rapidly over time. This means that a car acquired more cheaply need not be the most economical solution for a company. For this reason it is sensible to examine the issue of costs comprehensively and take into account all the related costs meaning the TCO during the selection of a car. strongest players in corporate sales. The current OPEL model range is among the youngest on the market. The advantages of the cars from this German manufacturer include, in addition to their generally acknowledged attractive design, also unusually high reliability, as demonstrated through studies performed by many independent agencies and authorities, such as DEKRA and TÜV. In the area of corporate sales OPEL is one of few brands to offer sales programmes optimised for operative leasing, meaning the minimisation of monthly instalments. Its strong price competitiveness and a model portfolio that covers practically all private and light utility vehicle segments are additional advantages of Opel vehicles. OPEL is also one of the few to offer companies the comprehensive OPEL PARTNER programme with regularly updated discounts for the employees of its partners. These discounts are always more advantageous compared to the normal retail offer. Interested parties have available a specialised internet portal for the programme at The Opel fleet manager is also always available by telephone/ and can answer specific questions. The future and alternative fuels Opel and its parent concern General Motors have systematically focused on alternative fuels for some years. A whole range of Opel models already leaves the factory modified for LPG and CNG. In the mid-term horizon Opel is betting on electricity the unique E-REV extended range system in the Opel Ampera electric vehicle, launched last year on the domestic market, perfectly eliminates the common concerns of the users of conventional electric vehicles namely fear of restricted mobility due to the limited capacity of the batteries. The Opel Ampera has a range in purely electric mode of around 80 km, and then it automatically starts an electric generator driven by a small combustion engine and the Ampera continues running on electric power. On a single charge and one tank of petrol for the generator motor the Ampera has a range of over 550 km, which is completely comparable with the operating range of conventional cars. The fact that the Opel Ampera s E-REV system is the most promising path for electric vehicles has also been confirmed through, among others, the respected European title Car of the Year 2012, awarded by a commission of around sixty leading motorist journalists from all over Europe. In the longer term Opel is working to develop cars with hydrogen fuel cells there are a dozen or so Opel HydroGen4 prototypes already operating in Germany in pilot tests in daily operation at a series of commercial clients. Zbyněk Janeček, Fleet Manager CZ,SK, Opel C&S Olbrachtova 9, Praha 4, Tel.: , Fax.: , Mobile: , zbynek.janecek@opel.com, OPEL Opel, which advanced to third place in terms of sales of passenger cars in the whole of Europe in 2012, is traditionally among the

3 How companies should handle automobile fleets by Karolína Topolová, CEO, AAA AUTO, Last year alone, AAA AUTO purchased more than fiftyone thousand cars in the Central European region, many of which were from company fleets. Perhaps our most prestigious recent catch was the government s fleet of BMWs, including the former official vehicle of Minister of Foreign Affairs, Karel Schwarzenberg. Of the roughly 35,000 cars purchased in the Czech Republic last year, 10,000 were sold by companies and 3,500 by entrepreneurs. As the biggest player on the market, we are able to buy a large volume of vehicles. Our pricing policy is so decisive that leasing companies which provide operative leasing ask us to assess company fleets. In this way we purchase packages of cars from renowned companies, banks, leasing companies, etc. These purchases are either direct or through auction. We make no distinction between small and large companies. We treat smaller companies just like the big corporations and they receive the same service. When selling off company cars, management must carefully consider the manner in which they will be sold and the company chosen for the task. Many times, the sale is entrusted to incompetent people, who do not have sufficient information and experience, and whose sole qualification is often simply that they are company employees. They don t know the history of the vehicle, they don t know who drove it, and they haven t inspected the vehicle in person and so often find some technical or cosmetic problem when viewing the vehicle with a potential buyer. This kind of nebulous approach fundamentally and negatively affects the price for which the vehicle is ultimately sold. A company cannot determine the actual fair market value of a vehicle if it does not compare offers. Multiple prospective buyers should be contacted. Offers should also be made to the big players on the used car market. They will often give better prices for larger volumes of cars sold. These comparisons should be made by the company to eliminate the possible undervaluation of vehicles by an individual, thus preventing possible losses on the assets being sold. As a professional car dealer with many years of experience on the used car market, AAA AUTO offers its corporate clients a number of benefits. These include transparent, free fleet assessment by our specialists, whose knowledge of the market provides our partners with the fair market value of individual automobiles. Of course, vehicles are physically inspected, even if the cars are located in multiple locations across the country. Naturally, these inspections are scheduled according to client needs. After inspection, we assume all liability for vehicles. We buy vehicles of all makes and models up to 3.5 t, whether these are single cars, entire fleets or parts of fleets. We handle all the necessary paperwork, and pay in cash or by bank transfer as the customer wishes. We are also able to purchase leased vehicles or vehicles with car loans, in which case we simply pay off the remaining payments. While our primary aim is to purchase vehicles outright, we can also arrange commission sales. We are able to guarantee the purchase price we offer for a period of up to one month. As a bonus for multiple vehicle purchases, we also offer our customers disposal services for vehicles that are no longer operational or no longer have valid technical inspection certificates. These vehicles are disposed of in an environmentally sound manner. We are particularly interested in near new and lightly used vehicles, which we then sell through Mototechna. For this market segment, we are interested in automobiles up to two years old with a maximum of 30,000 kilometres on the clock. In recent months, we have been approached by a number of corporate clients and managers who have expressed increased interest in such automobiles. They feel that the price of new cars is needlessly high, considering that a new vehicle loses 35-40% of its value in the first year. Therefore, we have recently increased our selection of luxury and utility used vehicles with VAT deductions, and when purchasing such cars, we are able to give higher values and offer the best price on the market.

4 The TCO phenomenon: Assessing the real cost of a company car Anyone managing anything concerning company vehicles cannot avoid recent frequent use of this new term TCO. Total Cost of Operation. Once upon a time it began with a wrong interpretation Total Cost of Ownership. But on one hand vehicles are not alwys owned and on the other hand it is not only book value, but also related costs, maintenance, administration etc. First attempts lead to aritmetical summaries of items related to vehicles. People used to round up depreciation, mandatory payments, insurance and maintenance. Next evolution stage added administration cost and labour joined with fleet management. Some brighter calculaters could also see vehicle as a value breeder however is it a breeder not very stable. Latest development stage of cost calculating takes in concern alternative cost and loss profit. This is what we can call TCO at the lastest stage of development. Those more sophisitcated also see cost of unrealiability and immobility. Nevertheless, there still is a huge lot of comapnies, that cannot even join a cost to a vehicle, not even sort by by origin. First stages had significat disadvanteage focus on purchasing value. This usually lead to useless compromises- Second stage showed better analytical ability form the accounting and fleet point of view. The latest stage also shows technical, human resources and financial controlling point of view. TCO should be considered from all points of view and tuned by real values. If anylis shrink to perfect unreal conditions form manuals, it will not get any better. Several expertise companies offer real values for bargain money. Also in quotations of leasing companies several similarly looking items show competely different content. It is a piece of a tough job to make order in the mess of all related costs, aspects and influences. But it is worth the labour. You can be sure that the biggest cost drivers are often hidden in background. Price difference among two providers can be funnily small related to ability to avoid unexpected costs joined with accident rate, wrong management or duties setup. Contact us at arval@arval.cz,

5 CCS services: the key to economic and effective management of company fleet operation costs CCS services: the key to economic and effective management of company fleet operation costs Company fleet operation costs have been the subject of increasing attention in recent years, thanks in particular to skyrocketing fuel prices. CCS, a division of FleetCor, is proud to provide fuel cost management services that are focused on securing substantial savings. Its services cover well-known fuel cards and company fleet monitoring in the Czech Republic and Central Europe. CCS core service is the issuing and administration of corporate fuel cards, offering clients a convenient payment method for refueling petrol, diesel and LPG company cars, and providing a complete overview of all transactions and corporate fleet operating costs with minimal administrative burden. CCS fuel card provides additional value through summary invoicing of transactions, the largest acceptance network in the Czech Republic, a wide range of card setup options and a focus on securing fuel cost savings. CCS fuel cards are accepted at almost every gas station across the pricing spectrum, from the most expensive to the cheapest. Picture 1: Fuel price development in 2012 (red high-priced chains, blue average and low-priced chains) services for clients basic needs (e.g. electronic log book, private/ business trip assignment, travel order, related expensing, etc.) as well as for professional use (fuel consumption measurement, reading vehicle internal characteristics, monitoring peripherals, physical measuring of fuel level in vehicle tank etc.). Monitoring services operate across the region, with a focus on the Czech Republic and Slovakia and with some extension to Eastern Europe (including Russia) and are provided both under its own brand of CCS Carnet and under the brands of major partners, especially leasing companies. CCS Carnet system monitors vehicles and machinery by detecting their current position via GPS satellites and transferring data to the central CCS Carnet processing centre by GSM network. It allows for effective control of costs, a full overview of the fleet and the economy of its operations, vehicle security and effective usage planning. In addition, it offers a significant reduction in paperwork for company employees. No software installation is required and it is continuously available to users through the CCS website. Operational reports are generated either as predefined reports or customers can specify their required outputs. The system is also able to generate alerts or alarms based on selected customer requirements. A huge advantage for the user is the synergy of CCS fuel cards and CCS Carnet system. Together, they form a highly effective tool for cost control and monitoring driver economic behavior. When using both CCS cards and monitoring, the user (usually a supervisor or a dispatcher) has real-time sight of all fuel purchases made with CCS cards through the monitoring application. Unlike its competitors, CCS uses proprietary maps to display data information about trips and does not provide any such data to third parties(such as Google Maps). The flexibility of the system combined with our extensive experience operating across various industries allows us to provide customized solutions. Long-term research conducted by CCS demonstrates that 2-10% fuel cost savings can be secured by purchasing fuel from more reasonably priced gas stations. Analytical support, including regular reports per driver and detailed analysis of potential savings, supports the securing of genuine savings instead of those claimed by high-price fuel chains. Picture 3: CCS Carnet technological solution Picture 2: Example of fuel average price optimization for a CCS client (dashed line national average fuel price, dashed line client average fuel price) It is important to note that fuel quality has improved significantly and is now comparable across most chains and private sites. CCS also specializes in a further area which offers clients significant operational cost savings: the monitoring of company fleet vehicles in the Czech Republic and Central Europe: CCS Carnet fleet monitoring system provides a wide range of The key benefits of CCS Carnet are cost savings of up to 30% achieved through a reduction in total mileage and an increase of share of private trips (paid by the drivers, not by the company). Contact us via telemar@ccs.cz or call to discuss special offers.

6 To lease or to buy: A question of money management Operational Leasing from LeasePlan is an easy way how to get a car together with all services needed operate the car for business purposes in Czech Republic. No down payment is normally requested it depends on the credit profile of the lessee. Monthly lease payments usually are less than loan payments for a new car or depreciation charged in case or capital expenditures. Additionally, the client will encounter less paperwork, inspections, and registration hassles when leasing a car. Leasing appeals to individuals who use cars for business, need a car for a longer period of time, want to know their monthly costs in advance, or want free up their own cash to invest in different activities. The following table provides an overview of the comparison between leasing and buying: Comparison of Operational Leasing versus Buying Operational Leasing - LeasePlan Monthly payments are related to depreciation and interest. Depreciation is calculated as follows: (Investment Residual Market Value at the end of the lease period) / Contract duration. Monthly lease payments are significantly lower than car loan payments as the calculation of depreciation subtracts the residual market value. A down payment normally is not required. At the end of the leasing period customer just returns the car and changes that for new one according to his new choice. The leasing parameters like duration or mileage can be changed during leasing period based on actual business needs The ownership risk stays with the Lessor. Significant reduction of (in)direct administration. Predictable cash flow. Off balance sheet (OL = service). Effective budget planning and predictability. Purchase financed by a loan Monthly payments are applied to depreciation of entire car and relevant interest. Monthly payments include financing charges for entire car except the advance payment. Advance payment is usually is required. When the car loan is paid, the client owns the car and needs to administrate its sale in order to replace it for new vehicle. Duration of the contract can not be changed during the contractual period. The ownership risk stays with the client. Fleet management and Account is done internally in the company. Unpredictable cash flow. Investment is recorded in Balance sheet Incidental payment Typical customers of operational leasing are companies who need certain level of mobility to meet their business targets and who want to focus on their core business rather than on administrating the fleet. Therefore many companies decide to outsource their fleet to a professional and reliable partner. Such partner should not only passively execute the customer s instructions but he should actively advice on selecting the right car, duration, mileage and all other leasing parameters in order to keep the customer s costs under control. In case the leasing provider has been granted with a sufficient mandate, a yearly saving program can be agreed with the customers as well. Fleet Management Services Under the term Fleet Management we can understand all activities related to car purchase, operation and sale. Usually we can find here: Car purchase specification, order, purchase and delivery Car registration and deregistration Insurance Management Damage handling Replacement car management Regular Maintenance Summer / Winter Tire management Road assistance service management Fuel cards management Driver administration and legal/tax compliance Mileage monitoring Car sales Complex reporting Fleet consultancy Direct driver contact Daily account management Holistic approach (focus on TCO Total Cost of Ownership) Customers of LeasePlan do not need to spend time on choosing the relevant service provider for each service component separately. LeasePlan as professional fleet manager arranges all these services and a singe package and makes sure the customer receives one complex and reliable - service. In order to discuss more we can be contacted at