The Evolution and Transformation of Fleet Management

To learn more about upcoming fleet management trends, along with getting an update on the integration of the legacy companies Wheels, LeasePlan USA, and Donlen into a unified enterprise, AF interviewed Shlomo Crandus, CEO of Wheels. Below are excerpts from our wide-ranging discussion.

AF: From your viewpoint, how has the fleet market evolved in the past several years?

CRANDUS: This is a question that I believe we all have to answer for ourselves every day. Since COVID-19 hit us, there have been many shockwaves, and they still continue to propagate challenges that the industry is confronting and we are repeatedly reinvesting and reinventing ourselves.

If you think back, we’ve had microchip shortages, workforce challenges, supply chain disruption, and, more lately, hikes in interest rates. It’s unbelievable everything with which we’ve been dealing. But all of this is a catalyst for innovation and transformation that makes us stronger as an industry. We’re resilient. We find solutions. And I’m talking here on behalf of all of us as fleet professionals.

But the truth is that we are ready to face the new needs of our industry. And in my opinion, we all have to learn how to deal with an older fleet. If we look at AAA data – this is beyond fleet data – the average vehicle on the road today is 12-and-a-half years old. And if you look back as recently as  2021, the average age of vehicles was 11.8 years. So in just two years, we’ve increased almost a year in the age of vehicles on the road. And when you think about the shock waves that I mentioned, they do push our industry to evolve.

We see more and more technology in vehicles, and connected vehicles are integrated into the fleet management side and provide agility that’s helping fleets reduce downtime.

The data that’s being generated is very rich and important for fleet managers. It helps them and helps us make the best decisions to reduce costs, become safer, mitigate wasted time, increase productivity, and have self-sufficient fleet programs. To achieve these goals, we bring tools together with the discipline of big data, and we marry this with modern technology and reporting tools. And finally, we step into a world of artificial intelligence and machine learning. We’ve already implemented artificial intelligence and machine learning at Wheels. And we have some great initiatives that are incredible for our business and for our clients. But we’ll discuss that on another day.

Lastly, it seems like electrification is here to stay. Today, almost 10% of our fleet is electric hybrid or plug-in hybrid, which means tens of thousands of sedans, SUVs, pickup trucks, and last-mile delivery vans are EVs. Wheels generates over one-and-a-half-billion miles a year of great EV data that we use to mature our EV programs. So, in summary, there are lots of challenges, but our industry is resilient, and we’re finding our way to new places.

AF: In addition to the issues just discussed, we have witnessed many changes among fleet management companies, including the integration of legacy WheelsDonlen and LeasePlan USA into a unified merged company: Wheels. Can you share with us some new developments that have come out of this ongoing integration?

CRANDUS:  What we’re doing in the new Wheels is really transforming the way our legacy companies have done business. And I want to repeat this because what we’re doing is going beyond integration. We are focused on transforming our business. And I have to tell you that I feel great about it, and that’s why I can say that with a smile on my face. At Wheels, we are living and riding a unique opportunity to build something really special. We want to create future capabilities that are not available in the industry today, and we do this by listening to and internalizing what our clients tell us.

I'll tell you a bit more about this. The approach is to start with what clients want as opposed to what fleet does. This influences what and how we build new capabilities.

To make it understandable, let me give you a few examples. If you sit back and use your imagination, we’re talking about a fleet world where license and title renewals just happen without delay. It’s a world where an FMC can preemptively dispatch a tow truck to rescue a driver on the side of the road or even provide proactive services that know when a driver is involved in an accident and knows the condition of the vehicle before the first notice of loss is reported. And I wonder if your audience imagines things like this, because I can tell you that we are and we’re not only imagining it, but we’re also working on building this future right now.

We’re living in a unique opportunity and we can’t allow this to pass. We’re using the moment that we have at Wheels to create the best fleet management company, and it’s also important to say how we will achieve this. It starts by being open and really listening to clients, inviting new thinking, and not being constrained by our fleet past.

So we’re thinking differently, and we’ve organized Wheels differently. We’ve established two offices to help create our transformational technology. One is a digital office and we’re customer-focused there. Products and service delivery is what we’re accomplishing, and much of it is through digital means. This office will accelerate innovation, drive creativity, and create our differentiated future. The digital office will partner with an information technology office that is modernizing our technology, addressing architecture, data structures, and strategies, and moving us to new technology that gives us access to all sorts of tools, such as artificial intelligence and machine learning.

These are things that we don’t have to build in Wheels. They’re available, and we use them to make us more flexible, faster, more reliable, and our environments safer. Those offices and the rest of the teams will build our future technologies.

Talking about the transformation of our business, we also changed and moved away from a traditional commercial role and established a clients office where we have a laser focus on nurturing and supporting our clients, where we really listen to them, work with them, and hear their objectives. And we have a separate growth office and the term growth has multiple meanings. We want to open our minds, expand our thinking, and develop new capabilities, incubate ideas, and challenge ourselves to think outside the box to always be the best version of ourselves.

And if we do all these things and do them well, then we’ll also increase or grow our business. And the bottom line is that we’re creating something really cool. We’re not putting limits on what we will be, and we’re pushing for a level of excellence and innovation that I know we will achieve.

And when we get there, our Wheels community that includes our teams, our vendors, and, most importantly, our clients, will enjoy many years of benefits. We also want our clients to know that we’re taking care of their drivers to make it easier for them to get their work done.

AF: When the fleet management industry switched from desktop to Web-enabled fleet management with the advent of the Internet, it happened very quickly. I believe the same will happen again in the near future as new revolutionary tools change our industry. But let’s get back to the changes that are occurring within the new Wheels. You recently announced the Wheels executive leadership team. Have there been any other leadership changes or developments in Wheels since then?

CRANDUS: The answer is yes. We’ve announced our second management layers and some third layers. And I want to tell you that we’re being really thoughtful, sometimes taking longer to make the right decisions both for now and in the future.

Our leadership team has a serious responsibility to our teams and our clients, and we want to make sure that we bring the best of what we have with us on this journey. All of our leaders have spent time getting to know both each other and each of their team members. We’ve had many discussions and charted out different scenarios for our organization along with the trade-offs, in order to come up with the right structure.

Over the years, as AF’s editor, you’ve talked with and met people from all three of our founding companies and combined we have an awesome talent pool. There’s an amazing passion for the business and above all, a very rich knowledge about our business and most importantly, a respect and a desire to deliver for our clients. And my expectation as the CEO is that we build a team that is passionate about performance for both our clients, but also for us.

We’ll achieve great outcomes and more importantly, celebrate our achievements with our clients and with our team. I’ve spent a considerable amount of time with all of our leaders and many employees. We are setting high expectations for ourselves and I’m really excited about this team. I’ve been around for a long time and I can tell you that I’ve never seen a pool of talent like we have coming together to form a single organization. I’m talking about leaders, managers, but also supervisors and all the team members who bring success for Wheels and for our clients. I’ve said this before and still feel it really deeply that I’m honored and feel very humble about working with and leading the team that we have here. I’m very proud of all of them.

AF: How do you foresee fleet management evolving in the next five years? What’s your vision?

CRANDUS:  Mike, five years is a really long time; and I say that just thinking about five years, if you go back and think about where we were: I was the CFO of an iconic fleet management company called Wheels that was family owned. Donlen was owned by a rental car company, and LeasePlan was the largest global FMC in the world. Things were normal and the three of us had really good years.

And then COVID hit us. Think about the chronology that happened – Donlen was acquired by Athene, secondhand vehicle markets plunged and right after that scored record used-vehicle values. We’re all working from home. New vehicles disappeared and there were workforce shortages. Next Wheels was acquired and joined forces with Donlen. At the same time, ALD Automotive and LeasePlan announced that they’re merging and this opened up an opportunity for Wheels to bring LeasePlan USA to our family and become even stronger. It doesn’t stop there. The supply chain disruptions continue. Interest rates now are shooting up in response to control inflation and just to throw one more development in the mix, ChatGPT was introduced. All of these things occurred in just the past five years.

Now let’s look forward. As I said earlier, we’re challenging ourselves to transform Wheels and the fleet management business. And this means that we’re challenging fleet management conventional wisdom and defining our future state and making sure that we’re guided by the voice of our clients and our strategic long-term objectives. Now, I won’t disclose our long-term objectives, at least not right now. But I will tell you what we’ve heard from our clients and we’re working towards it.

The first item is electrification, and it’s pretty obvious that EVs are here to stay. And as I said before, we’re generating one-and-a-half-billion miles a year in EVs and this number will continue growing, but ICE (internal combustion engine) vehicles and EVs will coexist for a long time, and fleet programs will have to be dynamic to embrace what makes sense for a client’s business.

Wheels will serve all of our clients, and we are building a strong knowledge base every day to support clients moving exclusively to EVs.

Downtime management is another big one. The fleet management program of the future will not talk about cost savings, but will be dictated by a new level of efficiency. So our data and our clients data will have to become one and introduce a new world where every dollar spent in fleet will have its return on investment calculated on the spot.

Another thing we hear about is the freedom of movement in a flexible world. So what does that have to do with fleet? Well freedom of movement is a recognized human right by the Declaration of Human Rights, which is put out by the UN. It’s also in our U.S. Constitution.

Everything that we do is to make sure that people can come and go freely, efficiently, and do it quickly. In the post-pandemic world, the concept of freedom of movement is being extended and nowadays we expect to have our own experiences from home, the office, while traveling, and these new expectations are pushing fleet programs to change in the new era of geographic expansion, it’s a race to gain a competitive advantage to serve clients. We serve our clients who serve their clients and their expectations, fleets are playing a central role in this race to reach success and competitiveness.

There are a couple more items we can discuss. I talked about how we’re rethinking technology. Artificial intelligence and machine learning are a reality and we will use it to reduce costs and improve efficiency. We’re also using robotic process automation (RPA) and we’ve also built augmented reality applications into our mobile app.

But in terms of technology, we have to think about a world where other technologies converge and come together. Vehicles will include additional technologies that will continue to create growing benefits – vehicles communicating with other vehicles, communicating with fleet management tech, vendor tech, and client tech. All of these technologies are going to come together, and we’ll be able to use tools, like AI, machine learning, and augmented reality to build an ecosystem to better address mobility needs.

The last item that you don’t hear fleet companies talking about a lot is privacy. Vehicles nowadays know more about us than ever before. Wheels is committed to building out our new world of fleet data to create efficiencies and better experiences. But we’re going to do it in a way where we respect the privacy of our clients and the drivers, and this topic will affect how we manage our assets and how we select assets and manage our data. And there’s scenarios that we’ve already seen where Teslas have gone to countries like Ukraine with their driver’s data. Good things don’t happen in that scenario.

And we also need a more ample discussion about who owns the data. We’ve had scenarios where the OEM says it owns all of the data that comes out of the vehicles.

I can keep going, but those are the top five items that we’re focused on at the moment.