A differentiator for fleet
lessors?

Brian Rogerson looks at how fuel cards can add value for motor
lessors and lessees alike
 
 
 
An increasing number of European
fuel card operators are using motor lessors to distribute their
cards. As more companies opt to lease vehicles on an operational
contract (contract hire), where a fuel card is included, the
potential market opportunity for fuel card issuers has increased
rapidly and is likely to continue growing.

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After vehicle depreciation, the second biggest area of expense for
fleets is fuel, accounting for around 25 per cent of cost. Given
this, and recent and future price volatility, it has never been
more important for fleets to manage this expense – and the way that
fuel is purchased is the key to this.

Direct purchasing, using fuel cards, provides companies with a high
degree of information and control over their fuel acquisition.
Moreover, fuel cards make it possible for employers to track
purchasing activity occurring at many different dates and places
across the country.

Shell is one example of a fuel card provider that has entered into
relationships with fleet lessors and gained access to a high
proportion of the leased vehicle parc as a result. In Germany, for
example, Shell has a large number of relationships through its
existing agreements with Volkswagen Leasing, Deutsche Auto Leasing,
Auto Service Leasing, LeasePlan and ALD Automotive.

Ricky Hill, forecourts analyst with Datamonitor tells Motor
Finance: “These relationships provide Shell with access to a total
of 300,000 vehicles and the possibility to supply fuel cards to up
to 29 per cent of all vehicles leased on an operational contract in
Germany.

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“Similarly, BP’s agreements in Germany with lessors give it access
to around 314,000 vehicles and the possibility of supplying fuel
cards to up to 34 per cent of the total operational leased vehicle
parc in Germany,” Hill says.

Opportunities as contract hire grows

Hill’s research indicates that between 2003 and
2006, the number of vehicles leased on this basis grew by 660,000
across Europe. Furthermore, the number of company cars that are
funded by contract hire is predicted to grow at over 10 per cent
annually in Poland, Austria and Hungary, while the more mature
markets of the UK, France and Germany are set to grow at around 5
per cent annually.

Hill believes that there are still big opportunities for fuel card
providers to partner with lessors. He says: “There are many leasing
companies in mature markets and, as a result, potential partners
are plentiful. In addition to the large multi-national fleet
lessors, which are more likely to have existing arrangements, there
are also a high number of small, localised companies which are less
likely to have these pre-existing relationships. The 10 largest
operational fleet lessors only account for half of the market in
the UK, Germany and Spain.”

Measuring your carbon footprint

Arval Fuel Card claims to be the most widely accepted fuel card in
the UK. Mike Waters, head of research and development at Arval
says: “Over the past two years or so fuel and fuel management have
risen in importance for fleets because of rising fuel costs. It has
become a total cost of ownership issue and providing a fuel
management card is an excellent way for lessors to differentiate
themselves from their competitors.”

Waters explains that Arval’s card can measure the carbon footprint
of a driver, and therefore the lessee’s environmental
responsibilities.

“Duty of care issues are the other big challenge for fuel cards,”
he notes. “A driver showing poor long-term mile-per-gallon readings
can be encouraged to comply to best practice procedures.”
For the future, Waters believes that as vehicles become powered by
a greater selection of fuel types fuel cards can perform as a fuel
and vehicle comparator: “They will show the total costs of
ownership profiles for, say, diesel, petrol and hydrogen-powered
vehicles.”