FMC Panel: Industry Leaders Speak Out
Fleet Management Company executives share their insights and views with fleet professionals at NAFA’s 2017 I&E.
The annual FMC Panel is a staple of NAFA’s I&E. Executives from North America’s biggest fleet management companies (FMCs) gather together to share their views with all in attendance, as well as to answer questions from the audience.
This year’s panel included Tom Callahan, President, Donlen; Chris Conroy, President & CEO, Holman Business Services & ARI; Dan Frank, President, Wheels; Norm Lyle, President, EMKAY Canada; Jeffrey Schlesinger, President & CEO, LeasePlan USA; and K risti Webb, President & CEO, North America, Element Fleet Management.
Although the panel tackled a broad range of topics, a few key areas of interest seemed to be on most people’s minds.
The discussion began with a closer look at self-driving cars and trucks. While the technology is certainly exciting to contemplate, just how long will we have to wait to see these vehicles on our roads?
The panel agreed that a number of things need to happen before autonomous vehicles become ubiquitous. First the technology needs to be perfected. Many companies are pouring billions of dollars into research to make it happen, and it seems like they’re doing a good job. In fact, the actual technology may be one of the smaller hurdles to overcome.
The second issue is cost. When they first put autonomous vehicles on the road, one of the panelists explained, it cost over USD $150,000 a vehicle for the LiDAR, computers and other electronics. Costs have come down dramatically since then and should come down even more in the next five years.
We also need to look at the regulatory issues. That will take less time than some may think, said the panel, because the benefits to society are so compelling in terms of safety, reduced emissions, reduced congestion, improved productivity, mobility for the elderly, etc. There are a lot of people working on moving regulations forward.
The last challenge is social acceptance. The majority of people are uncomfortable with the idea of losing control of a vehicle. But as people get used to the idea, they’ll likely accept it.
With cars and trucks driving themselves, will we still need fleet managers and fleet management companies in a world where you push a button and a vehicle shows up to take you where you want to go?
The panel seemed to agree that this is not the kind of world we’re likely going to be living in. Since much of fleet is about service vehicles, law enforcement and the like, we’re not going to be able to move to an Uber-type fleet to fulfill those needs. These vehicles need to be upfitted with the right equipment in order to meet each fleet’s specific needs. Furthermore, many of these fleet vehicles are branded, so it wouldn’t make sense to get rid of them.
On the sales side, what may be different, said the panel, is that in some urban applications you may have those who won’t need to own a vehicle. But it’s not a solution that will work for everyone. You still have to factor in productivity, which will diminish if people have to wait for a vehicle to show up and take them to one appointment after another.
Benefits to fleet
The autonomous vehicles of the future may in fact be able to boost productivity, since they’ll serve as mobile offices, allowing the occupant to work while the vehicle does the driving. The bottom line is that Uber will not be practical for the majority of fleets.
Having said that, one of the panelists expressed the belief that over the next five to 10 years, the fleet industry is going to move from a fleet management company to a fleet mobility company. The paradigm of one person to one car for all fleets will be challenged. The ride sharing/car hailing economy is here to stay, said the panelist, because the next generation very much believes in sharing everything.
In Europe, one of the major fleet companies has just entered into a partnership with Uber, because they believe that this will become the next generation of moving people from one place to another. In the U.S.A. we need to ask ourselves what we can learn from the European model, said the panelist. We still ride around in large vehicles that burn lots of fuel.
Total cost of ownership
The panel next addressed total cost of ownership (TCO) and how they see it changing in the near future. All the panelists agreed that TCO has been pretty flat over the past few years. Interest rates have been low, fuel prices have been low, residual values have been good, and we’ve seen very modest increases in the cost of the vehicles.
In fact, we’re getting more for our money today since vehicles are equipped with better safety systems, better technologies, and other amenities, but at a comparatively low price.
One of the panelists suggested that TCO might change in a rather unusual manner in the future. There are companies out there that are willing to pay for the information collected by today’s vehicles, he explained. As a bizarre example, weather stations are willing to pay for the information that comes from the temperature sensors in vehicles. That way they can have access to a million temperature points across a city, which allows them to forecast weather more accurately. So in the future, vehicles could actually be free, or substantially subsidized, based on the information fleets collect and would be willing to sell.
Keeping up with change
There’s little doubt that the world is changing, and so is fleet. One of the panelists explained that when we emerged from the financial crisis of 2008 a lot of companies went into a retrenchment mode, cutting costs. Now, industries are looking at growth, and one of the things that’s exciting about that is new technologies and how they’ll be able to use them to sell more products and service their customers better.
He urged everyone in the audience to do some out-of-the-box thinking as they contemplate ways to take advantage of autonomous vehicles. Maybe we’ll see fleets investing in autonomous vending machines that will drive themselves around town to where they need to be, or maybe they’ll be used for mobile advertising, or an autonomous showroom for products. Who knows?
The final thought from one of the panelists summed up the matter nicely: Change is coming. We can either fight it or embrace it. Change is here, change is good. We need to figure out how to take advantage of change to make fleets better.