By Tod Trousdell, Fleet Marketing Consultant
January 23, 2023
Last year was a curious one for fleet. Fresh off pandemic restrictions and on the precipice of potentially huge changes, the industry performed a virtual sideways dance, posting similar numbers and facing nearly the same problems as it had the previous year. There were shortages of everything from people to products, as well as supply chain issues.
But what about 2023? As in most years, it has started with big intentions and bright ideas. But will the realities of an industry in transition stop it in its tracks?
Here are five major challenges facing fleet as we begin 2023. They’re certainly not the only issues, but if the industry is going to experience another golden era, these are the issues it needs to address:
VEHICLE SHORTAGES
Vehicle availability – or the lack thereof – was a top concern in 2022 and will be perhaps even more so in 2023. And why not? Considering that supply chain issues and shortages resulted in the lowest new vehicle sales in a decade in 2022, there’s little cause for optimism in 2023.
And while OEM’s are projected to increase sales by roughly a million units (to 14.8 million) in 2023, it’s hardly the pre-pandemic salad days that it enjoyed for years. How that translates for fleets remains to be seen, but virtually every corner of the industry has – and will continue to – suffer from the lack of available vehicles.
Without a steady flow of new vehicles, all of these entities will continue to be negatively affected. The situation is also causing rancor between OEMs and fleets, most of whom are not receiving anywhere near the number of vehicles they’ve ordered or need to support growing business models.
And while signs point to an increase in available vehicles in 2023, no one believes there will be nearly enough to meet increased demand, likely leading to a plethora of problems for fleets and fleet service providers for at least the rest of 2023 (and quite likely beyond.)
EV ADOPTION
After years of being little more than an industry curiosity, EVs took front and center at the 2022 NTEA Work Truck Show and haven’t looked back. With major corporations tripping over themselves to tout green and sustainable initiatives, fleet managers are under tremendous pressure to integrate this new age of vehicle into their everyday operations.
During more than 20 on camera interviews I conducted with fleet managers at this year’s Work Fleet Forum in October, more than half said they were under pressure to implement a sustainable EV program by 2025, with several needing to have a majority of their vehicles electric by 2030.
But while excitement over EVs remains high in corporate boardrooms and with manufacturers, that excitement hasn’t necessarily carried over to fleet managers. As we head in to 2023, many fleet managers seem reluctant to go “all in” on electric vehicles as fears around range and charging infrastructure persist. Throw in anxiety around a virtual laundry list of unknowns, and widespread EV adoption may be a long and painful process.
Further, while corporate virtue signaling and consumer trends will continue to pound the EV phenomenon into the fabric of fleet, no one should expect a smooth – or overnight – transition no matter how badly culture or corporations want it. Look for 2023 to be the year that EV exuberance hit the harsh realities of just how hard widespread adoption will be, and how long it may take.
INDUSTRY DISRUPTION
As anyone who’s been around fleet for long can attest, the industry looks very different today than it did just a few short years ago. Consider the fact that just prior to the pandemic, there were arguably seven large fleet management companies who have now consolidated down to three. Or that a decade ago, large corporate fleet operations were the standard of the day, run by highly experienced fleet managers with large staffs and sizeable budgets.
Today, those fleet manager ‘fiefdoms’ have often been moved under procurement department’s or replaced by hybrid procurement fleet professionals or, in many cases, dedicated procurement staff with little actual fleet experience. That’s a lot of change for one industry to absorb, especially in such a short period of time.
The transition has left many fleet managers overburdened and confused as they adapt to new or changing partnerships. It’s also left some highly skilled, long-tenured industry professionals, looking for new opportunities. How this will all flesh out – or when it will end – is anyone’s guess. But given the atmosphere around corporate M&A in general, no one should expect fleet disruption to end anytime soon.
SPIRALING INFLATION
Headed into the new year, the doom and gloom around inflation was palpable. With corporate titans sounding the alarm, and the inflation rate 8% higher in 2022 compared to 2021, there’s much to be concerned about, especially as a cautious Federal Reserve eyes continued rate increases and nervous consumers and businesses stockpile cash.
The result has been skyrocketing prices and waning consumer – and business – confidence, none of which bodes well for the fleet industry. How this will amplify in 2023, and what it will mean for fleets, remains to be seen. But with access to cheap and easy financing drying up, and experts offering dire predictions, the likelihood of a soft landing this year is probably a longshot.
Considering this precarious position, the truth is that further tightening of monetary policy – or the slightest wobble in the world’s economy – could have disastrous effects. Not just for consumers, but for fleets, many of whom are still reeling from rising costs and a lack of access to products and raw materials. Given this, it may be wise for fleets to show restraint in 2023, or at least until the economic picture comes clearer – something many think will happen by the end of the year.
ACCEPTING THE NEW NORMAL
Ever since the Covid pandemic ended, there seems to have been the perception among many that the world would wake up one morning and everything would be back to the way it was in 2019. And that suddenly, the good old days of plenty would return in spades. Plenty of vehicles to go around. Plenty of employees and drivers to meet the industry’s needs. And plenty of access to fast and easy financing to make it all happen.
But as supply chain problems persist, inflation continues at near record highs, and vehicles – both new and old – remain hard to find, it’s obvious there’s more to returning to the days of plenty, than simply waving a wand and wishing it were so.
In fact, the reality is that the world in general – and fleet in particular – has most likely already found its new normal. And that most of the problems our industry has been experiencing the past few years, are here to stay for the foreseeable future. Given this atmosphere, it’s probably a good idea for fleets to stop waiting for better days, and to simply come to grips with what can be characterized as the “new normal.”
As one industry CEO, an association officer, told me last week: “enough already…it’s time for all of us to stop whining and get back to the business of fleet!” And while that may be easier said than done, it’s probably a good bet that the fleet professionals who take that tact will be further along in the game than those expecting the industry to resemble what it did a few short years ago. The truth is that those who accept this fact can likely gain a competitive advantage by simply jumping in with both feet and getting at it!
About the Author
Tod Trousdell is a marketing consultant and owner of RobertsTrousdell Marketing in Atlanta. In addition to working extensively in fleet, Tod has worked for over 30 years in the cable, sports and hospitality industries, specializing in marketing and brand strategy, research, campaign development, messaging and more for companies like Coca Cola, the International Olympic Committee and Wyndham Hotels. He can be reached at [email protected].
