By Ricardo Fonzaghi, Senior Vice President International Sales, LeasePlan International
So your fleet is going global… now what? Aside from the planning that comes with taking a fleet overseas, it is very important to understand some of the cultural variances between managing a fleet in the United States and Canada versus the rest of the world.
One of the most important cultural guidelines to keep in mind is that, in North America, a car is what you drive; in the rest of the world, a car is how you “dress” – it is a symbol of status. This is a powerful tool you can use to your advantage to realize cost savings overseas.
Four years ago a client asked us to manage his fleet in a way in which, in the long run, he would end up with zero cars on the road. We showed and presented him with a case study that proved that eliminating cars from his fleet would drastically increase his cost overhead. However, we could proactively help him achieve more savings by identifying real-time key performance indicators and justifying the use for each car in his fleet.
With that in mind, we analyzed his program on a car-by-car basis, identifying the real need for each vehicle.
In North America, it was an easy exercise as there is practically no fringe benefit. The car was there for a reason, and the reason was used as a justification. However, when we crossed the border to other markets we identified that more than 70 percent of the company’s fleet included fringe-benefit cars.
Our task was to find a fit for those vehicles in a model defined by business-driven miles and tax advantages of providing a vehicle to an employee.
We found that because employees perceive company-provided cars as a high-value commodity, we could save our client the higher labor taxes that come with a higher salary by providing a vehicle as a benefit to the employee.
At the end of the day, although his fleet increased by five percent, we were able to realize overall savings of about 17 percent in absolute numbers.
For the above-mentioned reasons, company cars will most likely always be provided in Europe and most of the rest of the world until we have a drastic change in the cost of labor taxes. So what about the United States? Well, the same could apply, but labor taxes are technically lower than an employee’s perceived value of a company car.
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About the Author
Ricardo Fonzaghi works as senior vice president international sales for LeasePlan International. He is responsible for developing international fleet management programs for large corporate fleets based in the Americas. Through the years, he has delivered savings and quality improvements for clients by analyzing and understanding the financial, competitive and process sides and consolidating these in a results-focused solution.