By Tod Trousdell, Fleet Marketing Consultant/Partner, RobertsTrousdell Communications
By many accounts, this year’s Automotive Fleet Leasing Association (AFLA) conference in San Antonio was a watershed moment for Fleet. After 18 months of little to no face- to-face interaction, more than 300 fleet influencers gathered for what turned out to be three fruitful days of robust interactions with customers and colleagues most had not seen since the start of the pandemic. And while attendance was noticeably lower than recent years, most attendees seemed to be reveling in an equal mix of personal and professional interactions that renewed spirits and deepened fleet’s resolve to not only overcome the events of the past two years, but to launch what many feel will be a renaissance for the industry.
And while it was obvious from the week’s spirited events that fleet is alive and well, it remained equally apparent that the industry has several obstacles to overcome before finding its “next normal.” With that in mind, here’s a look at five continuing challenges facing fleet as it emerges from a successful AFLA conference, and charges into what hopefully will be yet another enlightening and fruitful era for this great industry.
Overcoming the Micro Chip Shortage
Perhaps the biggest unknown facing fleet, the global chip shortage, has negatively impacted almost every industry on the planet. For auto manufacturers shortage has been particularly painful as chips play an increasingly important role, with the average new vehicle requiring nearly 3,000 chips to run a myriad of systems and software. With chips in short supply, the results have been devastating, costing global automakers a minimum of $210 billion in lost revenue in 2021. Horror stories of major manufacturers closing plants and cutting production because they can’t find chips pop up daily, and the situation has stressed fleet as access to new vehicle inventory dwindles, and prices for used vehicles zoom to historic highs.
Worse still? Even the chipmakers find it hard to predict when the shortage will improve for automakers as would-be buyers jockey for their share of the global supply, and chip makers prioritize more lucrative markets. And with a majority of chip production concentrated in the hands of just a few manufacturers – most of whom are backlogged for years – the situation could even get worse, leaving auto manufacturers scrambling to find creative workarounds and forced to make tough decisions.
Integrating EVs Into Fleets
Questions around how to best integrate electric vehicles into global fleets have swirled around the industry for years, a drumbeat that has only grown louder as auto manufacturers go all in, and the current administration challenges both the public and business to move on from traditional fossil fuels. And while obvious challenges remain around fueling, range, infrastructure, and ROI – this year’s AFLA conference proved that fleet is keen to find the best way forward – a fact that was evident as attendees packed the final day of this year’s conference as EVs took front and center. At this point, it’s clear that the fleet industry will spend much of the next decade – and perhaps beyond – looking for the best way to make the promise of EVs a reality.
Solving Global Supply Chain Struggles
Completely separate from the micro chip shortage, global supply chain challenges are having an oversized effect on the auto industry – a big reason that global automakers will make 7.7 million fewer units than they planned to in 2021. That’s a number that’s doubled since industry watcher AlixPartners released its first prediction in May, a sobering reminder of how fluid and wide-ranging the situation remains. From a shortage of ships and containers, to difficulty finding truck drivers and filling open positions, automakers have been rocked by supply chain problems, and from all indications still have pain ahead. That doesn’t even include shortages of materials like resins, steel and rubber that see automakers paying an average of $2,000 more to manufacturer a vehicle than they did before the pandemic.
Adapting to a Procurement/Fleet Hybrid
While fleet will undoubtedly face a number of challenges related to the pandemic for at least the next few years, that doesn’t mean the industry had no challenges when Covid-19 first reared its ugly head. And perhaps one of the biggest challenges was the migration from a traditional fleet management model to a hybrid fleet manager/procurement model, a change that continues to have meaningful impact across the industry.
For fleet managers it’s often meant a change to long held practices, a reduction in staff, and – in many cases – early retirement or termination, a fact seen in the missing faces and career changes of many long time fleet managers. For fleet management companies and allied service providers, it’s meant understanding how to sell to – and service – a new style of client, two things that aren’t likely to change as the businesses that own fleets chase the quarterly number, and corporate structures are remodeled for optimum savings. And while this topic is likely not top of mind given the current challenges brought on by the pandemic, rest assured the conundrum of how best to approach this changing dynamic is alive and well.
Leveraging Technological Opportunities
While the pandemic may have slowed most industries, it turbocharged the technology sector as companies scrambled for new, easier and more efficient ways to engage and retain customers. Toss in the promise of artificial intelligence – which has exploded over the past couple of years – and it’s little doubt fleets and service providers will soon be considering a brave new world of technological innovations and opportunities that can only improve and optimize their offerings, and usher in a new and exciting age for fleet.
Tod Trousdell is a brand and marketing consultant who has worked for over a decade with a number of fleet entities and allied service providers. His firm – RobertsTrousdell – specializes in everything from branding, research, and strategy to creative and campaign development, digital, social and more. He can be reached at [email protected].
