Who owns business mobility?
Peter Cooke
investigates the changing face of car ownership in the UK and asks
what the future of personal and business mobility might hold.
Much has been written over recent decades
regarding personal mobility, public transport and increasingly,
mobility and the carbon footprint. But a lot of talk has been
grandiose policy to resolve the situation in a generation, or in
the life of the present government – remember John Prescott’s
policy for solving the issue? A lot was talked about it, plans put
into place; they are still there gathering dust and providing homes
for spiders.
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Maybe we need to look for something a little more
logical and practical in terms of managing personal mobility and,
through it, the ownership of that personal and business
mobility.
That is not meant to sound Marxist, but to be an
objective statement.
According to an excellent study by the RAC
Foundation, The Car in British Society 2009, since the early 2000s
annual car mileage in the United Kingdom has only grown in line
with increases in adult population. Given the growth in population
in part driven by immigration, that figure may well continue to
rise.
There has also been a growth in car ownership and
access to car use among lower-income groups, such that 75 percent
of households now have access to one or more cars. Nearly 75
percent of the adult population have a driving licence – the cynic
would claim that this number is more than have three or more good
GCSEs – but we will not introduce politics into the equation.
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By GlobalDataHowever, the latest report from the Department of
Transport, Delivering a Sustainable Transport Strategy
2008, firmly states the level of car use is still considerably
above the levels regarded as being sustainable.
What might be done about reducing, or even stopping
any further rise, in vehicle use – and what might be the
implications for motor finance?
Tipping point reached
I maintain that personal business
mobility is on the cusp of a revolution. Businesses are starting to
take the concept of carbon-free mobility as feasible rather than
relegating it to the domain of tree-huggers and little green
men.
There are already an enormous number of
technologies and practices available to businesses to help reduce
personal business mileage.
Consider some of the more obvious:
• Conference calls; just how many Monday sales and
team meetings could be replaced by a simple conference call – and
coffee at home, rather than struggling through commuter traffic to
get to the office – only to leave again and get back to where you
started?
• Video conferencing with colleagues and with
clients, possibly including the use of Skype. This technology may
not be perfect, but it could eliminate a lot of routine
meetings.
• Integrated use of telematics – using the
capabilities of systems to plan visits and provide real time
management contact. Enormous savings are possible, and costs are
continuously dropping.
• Use of WiFi and Blackberry – already growing at
geometric rates, and reducing the amount of material to be carried,
but offset potentially by security issues for many.
During the last recession we saw a decline in
business mileage, as sales territories grew, and the numbers of
field staff were cut.
Could we be moving into a position where the change
in business circumstances, coupled with the technologies noted
above, could be brought together to offer real savings in business,
and indeed private mileage?.
So far we have only touched on generalities – but
what might be the real issues brought into the office, to the
business mobility provider and user, and what might that mean for
motor finance – or should we call it ‘mobility finance’?
I want to ignore public policy, motorways and rail
transport, and focus on the here-and-now issues and concerns.
Cars for business
Shared cars in almost any form remind me
of cigarettes and pipes: you would offer another person a cigarette
without thinking, but you would not share your pipe with them. Is
that why car sharing and driver sharing have not, historically,
been successful?
Certainly some organisations have returned to a
form of pool cars – one is able to request a pool car for a
specific task if one is not provided with a company car.
But pool cars may have hidden users – just how
often is the pool car actually available for the would-be user when
they want it?
Maybe organisations have been too timid. Is ‘car on
demand’ something which should be outsourced?
It used to be called ‘daily rental’ – but that
might be delivered in a number of different formats to satisfy user
company requirements. Consider some of the alternatives:
• Conventional daily rental, either through a
national provider or a local company – or both. To minimise
administration and manage budgets, departments can have budgets and
a simple electronic booking system through the travel coordinator
to get approval.
• Use a local daily rental company for ‘simple
requests’ which do not need the complex infrastructure of the big
players. By all means have a contract for provision – with
appropriate rates rather than paying rack rates.
• Let selected members belong to a car club. The
number and geographic coverage of these clubs is growing and they
offer enormous convenience to users with easy billing and audit
trails available.
The biggest single barrier is changing the mindset
of existing car users – the pipe/cigarette paradigm.
I maintain that personal business mobility is
on the cusp of a revolution. Businesses are starting to take the
concept of carbon-free mobility as feasible rather than relegating
it to the domain of
tree-huggers and little green men
It can be done – it may need money to change hands
as an initial incentive, and it may require significant expansion
of daily rental activities and thinking – but the opportunities are
bounded only by the breadth of thinking of the user.
Why a car at all?
Now we can get serious. How many journeys
made in cars are really short – even on business?
Equally important, how many of those
journeys are slowed down by congestion and looking somewhere to
park after a couple of miles?
Some NHS Trusts already pay their staff an
allowance for using a bicycle instead of a car.
Paris has had for a few years a system of public
rental bicycles, Vélib’, which work on a ‘rent it here, leave it
there’ principle, and it seems to be an unbounded success which is
being expanded elsewhere.
Would this not be a substitute for some business
car journeys in the UK? There has to be a motor finance opportunity
for forward looking organisations to provide bicycle rental
schemes.
Realistically one would be taking quite
comprehensive longer-term schemes, but is this an area for motor
finance players to consider?
It’s not as daft as it might seem and membership
and electronic charging would merely be an extension of current
technologies.
While the short-term rented bicycle may not be the
answer in every case – I don’t want my surgeon shaking with
exertion before he opens up my thorax, for example – there are
nonetheless plenty of alternative opportunities.
And public transport?
Buses and taxis can provide an
alternative to some use of the company car. We are having to carry
less and less equipment to meet clients – a Blackberry or a laptop
is generally more than adequate, leaving a hand free for a carton
of coffee – and the increasing use of technology to know when the
next bus is due can minimise standing outside, although even that
shorter waiting time could be used on the mobile.
Where are we going?
As a nation we have worshipped the car
for decades; we are now busy cooking the planet and burning
unsustainable hydrocarbons.
Is this general acceptance that we have to do
something about it, added to the recession and capital starvation
not an opportunity for major finance sources with an interest in
personal mobility – whether private or business – to start looking
at some of the radical options which might be adopted to save the
plant and build the profits?
While such personal mobility schemes will certainly
require serious and radical rethinking, they may also offer the
opportunity to invest long term capital into real
revenue-generating programmes.
The biggest challenge will, I fear, be personal
inertia. Why should I give up my company car and pick up a rental
vehicle? Somebody else will have used it; it may be dirty; there
may be no petrol in it. It’s not my job to save the planet, drivers
may think.
Personal mobility has changed from the horse or
donkey to the car, and there it has stuck.
The ‘fault’ for this (such as it is) could be laid
at the feet of politicians (think of the taxes and fines they would
have to surrender), or the easy availability of company cars, or
simply personal and business inertia – the mindset that the problem
is too big for us to handle alone, so we should wait for the Nanny
State to come up with a solution.
Whichever one of those unpalatable reasons, or mix
of reasons, may lie behind the lack of progress, just how long can
the status quo continue? There are motor finance opportunities
waiting to be evaluated, risks to be assessed – and a planet to be
saved.
The author is KPMG Professor of
Automotive Management at the University of
Buckingham
