The State of Executive Fleet Programs
Graphic courtesy of Getty Images.
The editors at Fleet Financials recently surveyed over 100 companies to ask about the size of their fleets and the types of vehicles that they are comprised of. Through the process of examining this data, a number of trends emerged.
One of these trends, in particular, appeared to suggest that executive fleets sizes were on the decline. Year-over-year, certain companies saw their executive fleets shrink by as much as half. This posed the question: Was this a widespread trend?
Experts at Element Fleet Management and ARI shared what their much larger sample size of data has shown about the state of executive fleets.
“I don’t believe it is necessarily the number of executive fleets is shrinking. Rather, what might be happening is that [companies] are being more strict about who qualifies to be part of their executive fleet program,” said Pamela Koehne, senior strategic consultant -national accounts at Element. “Maybe in the past, a particular fleet would include C-level executives as well as senior vice presidents, but going forward, they’re only including C-level executives.”
This approach of being more selective, she added, is caused by companies trying to be more conscientious of their executive fleets’ total cost of ownership. And, being more selective of who receives an executive vehicle is only one measure that companies are taking to keep TCO down.
Other measures some companies are taking include having executives take on more responsibilities such as paying for their own fuel or basic PM work like oil changes. Companies are also taking closer looks at which types of vehicles their executives are eligible for.
“There’s generally some sort of capitalized cost ceiling or monthly total cost of ownership ceiling. In some cases, there is some opportunity to lower it while still being able to provide desirable vehicles because companies realize that they need to balance their TCO with having desirable vehicles to retain top talent,” said Koehne.
In some cases, companies are working with executives to provide them the vehicle they want while still staying cognizant of their TCO.
“Let’s say a company’s capitalized cost ceiling is $75,000. What may happen is that if a driver really wants a particular vehicle, but it’s $80,000, they can go ahead and have that vehicle, but then they’d be financially responsible for the difference.”
Joe Moran, manager, account management, at ARI also stated that the data he’s seen suggests that, overall, executive fleet sizes remain healthy.
“The interest by companies in supporting an executive fleet has remained relatively steady for the most part over the last several years,” said Moran. “You will always see fluctuations in the market, depending on a variety of factors, the most important of them being the state of the economy and the state of the hiring market.”
Both the hiring market and the economy have been in a better place in recent years, so interest from companies has stayed strong.
However, he noted, some executive fleet sizes may be shrinking due to companies switching to other methods of providing vehicles to their executives, like reimbursement. Reimbursement, he added, allows companies to provide their top talent with desirable vehicles while not having to take on the complexity or administrative burden of operating an executive fleet program.
Access to Big Data may another factor that may be leading to smaller executive fleet sizes, Moran said.
“[Companies] are able to understand the job market, understand what competitive offerings they need to make available to their top talent in order to recruit and retain them, and can make a solid business decision as to whether to include the option of an executive fleet vehicle as part of someone’s compensation,” said Moran. “I also think companies are considering the full spectrum of options when it comes to this kind of benefit rather than automatically defaulting to simply providing a car.”
This, he said, is especially true when looking at the future of executive fleets. As autonomous vehicle technology evolves and becomes a viable option for companies, the way companies will have to think about executive fleets will become that much more complex.
“Adoption of some possibly new and radical approaches to the executive fleet are likely to be slow at the end of the day,” said Moran. “[Executive Fleets] remain a benefit that is designed to drive employee recruitment and retention for the most part, so shifting to a model where we may be talking about mobility and possibly sharing a pool of autonomous high-end vehicles will require a shift in perspective.”