By Mike Sheldrick
Without fear of contradiction, it can be said that the next ten years will see greater change to the automotive industry than the last fifty — or even more.
At the extreme, there will be significant numbers of autonomous vehicles. Indeed, we are witnessing several on-the-road, real-life experiments. Singapore first, followed by Pittsburgh. To be sure, there are substantial unsolved issues: insurance, differing state and city regulations, appropriate infrastructure, and even philosophy and morality if we add the trolley problem to the mix.
And it’s not just merely autonomous vehicles in our future. Many forward thinkers are pondering connected vehicles, as well. That adds at least an order of magnitude of mind-numbing complexity to the issues of the tomorrow’s cars.
And lest we forget, also building up a head of steam is the transformation of motive power from gasoline- or diesel-powered internal combustion engines to hybrids, electrics or hydrogen power.
Most of what has been written to date has focused on the car — or truck, or fleet itself. The driver has been considered only as someone who has to take over in emergencies, or whether she can sit back and happily text, phone, read, etc.
More generally, we have begun to think much more deeply about the issue of mobility. Individual car ownership or leasing may be in decline, and we will confront a transportation system combining conventional cars and trucks, autonomous cabs, shared rides, mass transit, and yes, even bicycles and walking. In fact, in Europe, some companies are already offering employees the options of cash instead of a car, if they reduce their environmental impact by alternative means.
In that vein, we recently sat down with Dillon Blake, Senior Director of Runzheimer, to talk about how many of these topics affect the age-old question of reimbursement vs. leasing as well as the recent entry of fleet management and leasing companies into reimbursement.
How does mobility play into alternatives that already exist: buses, trains, etc.? Even multi-modal options, such as driving to the station or bus stop?
Current alternatives, like buses and trains, tend to favor city-dwellers but can be cheaper alternatives for employee transportation. Business travelers can take advantage of high-speed rails between reasonably distanced cities. This is a cost effective and environmentally conscious option compared to driving.
Mobility programs are unique to each company. Two companies of similar size and geographical location may have two very different mobility programs.
Company A may be looking to attract recent college graduates and no longer offer company-owned vehicles in benefits packages and look towards ridesharing options like ZipCar or Uber. While Company B, for instance, is strictly concerned with mobility costs, so they may have a customized cent-per-mile program in place for employees.
Regardless of the situation, mobility decisions need to be made and a travel and expense program established.
Would Runzheimer attempt to assist a company’s employees in making a mobility decision? In real-time, perhaps with a Runzheimer app?
We currently work with companies to make mobility decisions that are right for them. With the mobile workforce growing nationally, mobility is a critical consideration for nearly every business today. With many hours spent on the road, we work with companies to ensure employees are safe, productive and satisfied with their mobile workforce programs.
Mobility programs begin with an assessment, then we benchmark a company’s program to others in a similar industry. From there, we implement the program that is right for the company and their mobile workforce.
Will the mobility changes ahead affect a company’s decision to lease instead of reimburse?
A company’s decision to lease or reimburse has a lot to do with current mobility programs in place. The motivation behind an organization’s program can be attributed to finances, risk or employee satisfaction, among other factors.
Companies that are concerned with employee benefits packages may look to lease vehicles in traditional methods, especially if technology allows for autonomous fleets. Since many organizations view company owned vehicles as a benefit option, autonomous vehicles would offer employees the ability to complete work or relax while driving for business.
But companies that are looking to mitigate risk may continue to opt for reimbursement options through the personally-owned vehicles. By looking at the motivating factor behind why a company is changing or adding a business vehicle solution, we can begin to prepare for a future with and determine new mobility options based on their needs.
What role do you see for Runzheimer with the advent of ridesharing and car sharing?
In the past, employee reimbursement was relatively straightforward, with payments for use of a single vehicle for work. Fleet managers are stressing mobility — with the associated time and cost and environmental impact of alternatives like Uber, Lyft, ZipCar, and some day, the autonomous vehicle that will appear in your driveway when you need a car.
In a digitally-driven age, Runzheimer continues to offer up-to-date reimbursement programs for fleet managers. Through our app, Equo, we are able to take mile management and put it right into drivers’ phones and then transfer that data to business leaders, CFOs, HR directors. and strategy officers.
While the atomization of apps is the future for company reimbursement programs, sharing economy services, like Uber and Lyft, also present the opportunity for automated mileage tracking.
In our “Vehicle Management in the Sharing Economy” study, we found that 72 percent of sharing economy drivers track their miles manually. This stat is quite ironic given the tech power at big ridesharing companies. Based on this study, it’s clear that ridesharing apps are not as robust and efficient for drivers as they should be.
Ridesharing not only presents a new opportunity for the development of mileage reimbursement programs for this new fleet of drivers, it also provides companies with a new travel solution. Instead of employers opting for taxis or black car services, business features have emerged for companies to begin exploring ridesharing apps for their business travelers.
At the onset of an autonomous vehicle, business vehicle programs could gain a new sense of productivity. While driverless vehicles would automate a substantial portion of business vehicle programs, there is still a role companies will play in managing this fleet, whether it’s choosing which autonomous company to use, addressing the risks or weighing the cost benefits.
Insurance is an interesting aspect of ADAS-equipped cars as well as autonomous vehicles. Could reimbursement result in reducing corporate liability exposure?
I recently read an interesting piece on proposed ADAS and semi-autonomous regulations in Germany: the liability resides with the manufacturer unless the driver is warned to take control. If he or she was snoozing, well, it’s the driver’s fault. The suggestion was that in certain circumstances they could talk, text, tune the radio, but not sleep, while in others, sleep might be possible.
Reimbursement programs may appear to reduce corporate liability exposure but often rely on accountability on the employer’s and employee’s end unless there is a properly managed and enforced program in place to ensure proper coverage.
To mitigate risk and properly assess liability concerns, employers should pull motor vehicle records on a proactive, not reactive, basis. In our Annual Mobility Benchmark report, we found that 63 percent of employers don’t regularly pull motor vehicle records or only check them at point of hire. While that falls on the employer, employees must maintain their vehicle.
In the wake of ridesharing, companies do not assume the risk in the case of driver-caused accidents. That falls on the sharing economy driver or ridesharing company.
But Elon Musk has a vision for personal cars to be used in an autonomous ridesharing fleet. So much is unknown in this instance but reimbursing an employee for using an autonomous ridesharing service may very well reduce corporate liability exposure.
More generally, we’d like to know about Runzheimer’s perspective on the entire range of leasing and reimbursement. What’s the outlook? Are there particular advantages for one mode (leasing or ownership) or another (reimbursement)?
There are definite advantages to company-owned and employee-owned business vehicle programs. If a company is looking to cut down on costs, a customized cents-per-mile program through employee-owned vehicles is a better option. But if an organization is hoping to beef up an employee benefits package, offering company cars could be better in that case.
The benefits of leasing versus reimbursing in a world with autonomous cars will be greatly dependent upon insurance policies. Will the car providers sell insurance with the autonomous car or will insurance companies continue to bundle packages?
It’s more than likely that all individuals would need insurance before being in an automated vehicle since the sole passenger is technically the “driver.” In some circumstances, if liability falls on the manufacturer, unless the passenger is prompted to become the driver, companies would need to develop a policy in place to mitigate foreseeable risks.
Runzheimer has long been a leader in reimbursement. What will be the effect of a fleet management company adding the option of reimbursement?
Runzheimer has the experience, data and technology to remain a leader in the industry. As reimbursement becomes a more common practice in business vehicle programs, we will continue to harness the technology and data we’ve been using for years.
Not only do we use our data to calculate the official IRS standard mileage deduction rate, our technology offers completely customizable cent-per-mile rates. For state governments, Runzheimer’s patent-pending TrueCPM algorithm uses geographically sensitive data, such as gas prices, insurance rates and topographical conditions, to calculate customized reimbursement rates for business drivers.
What are the key aspects of your value proposition? Both for reimbursement itself, and in relation to your competitors?
The technology, expertise and customer service we have here at Runzheimer sets us apart from competitors.
Our app, Equo, simplifies mileage capture and seamlessly records business mileage by automating the task of creating an IRS compliant mileage log. It’s one thing to provide a web portal or an application alone, but as with telematics solutions, it’s not about the data you capture, it’s about how you can use it.
We help businesses achieve visibility in business vehicle programs by sending data directly from our app to the people making financial and business travel decision. We ensure we are aligning to their goals and measuring for the success they expect.
Mileage reimbursement is the one thing that doesn’t require a receipt and as a result, has been an area for fraud in many companies. Through our programs, specifically Equo, employers now can see exactly what miles they are reimbursing people for.
We also ensure programs are the right size for each company, while considering compliance, geographic cost differences, fuel price changes and liability concerns. Rather than just providing the ability to see it yourself, we help manage the objectives set by our clients. As a result, our customers are able to better manage cost, reduce business risk and increase employee satisfaction in the mobile workplace.