Peace talks
Paul Collett talks economics and the environment to Hitachi
Capital Vehicle Solutions’ director of sales, Philip Peace.
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Philip Peace is director of sales, Hitachi Capital Vehicle
Solutions, part of the global Hitachi Corporation. Assigned overall
management responsibility for the UK sales team in 2007, Peace has
been with HCVS for 11 years having held management positions at
Honda, Inchcape Fleet Solutionsand VELO Vehicle Management.
Presiding over a fleet of 45,885 vehicles –
including vans, specialised vans and HGVs – Peace is at the sharp
end of the current economic and environmental climate. The lack of
liquidity, for example, has already resulted in lenders such as
Welcome Car Finance withdrawing facilities from unconnected
dealerships, and then there was the collapse of Dixon Motors, as
reported in MF. On the environmental front, reports of drivers
making fewer trips and a trend toward down sizing are well
documented.
Sub-prime
However, Peace confirms HCVS is relatively well insulated from the
financial element of the marketplace: “Our parent company is based
in Japan and, while no business is immune to the economic slowdown,
Japanese banks have not been impacted by the sub-prime market. As a
result, we have not been affected by the credit crunch in the same
way as some bank-owned leasing companies in the UK.”
But, as the cost of oil hovers around the $100 a barrel mark, Peace
is seeing a change in driver behaviour and purchase strategy. “For
the industry, the rising cost of fuel means fleet managers are
under more pressure than ever to reduce their running costs and
lower fuel bills. To this end, we are working with our customers to
ensure they are using the most appropriate vehicles for the job.
Changing make and/or model can have a significant impact on fuel
consumption. Driver training is also key here, as driving style
impacts on fuel consumption by up to 12 per cent.”
Rising costs
Rising fuel costs are also having a tangible impact on drivers who
are now making fewer journeys and also running on empty tanks more
often. “We are seeing a reduction in mileage travelled by company
car drivers too,” Peace notes.
“Consequently, we work with customers to optimise the term and
mileage vehicles are contracted to.”
Duty of care is also an ongoing issue for fleet managers, says
Peace, and has been brought to the forefront by the recent news
that distracted drivers could face up to seven years in jail for
causing death by dangerous driving. “Driver assessment and training
is an essential part of reducing fleet risk, and we are constantly
reviewing our risk management service.” Peace works with fleet
managers to ensure they have the right policies and procedures in
place to manage driver behaviour. “But,” he says, “that is only the
start. Companies must be prepared to monitor and enforce the
guidelines they put in place.”
Green fleet
And environmental issues are, understandably, impacting the
industry. “Reducing a business’ total environmental impact is
important to many organisations. But what some fleet managers may
not realise is that implementing a green fleet policy will not only
reduce the environmental impact of their fleet, it can also be an
effective way to reduce costs and address corporate social
responsibility issues,” points out Peace.
“Impending changes to corporation tax allowances will see
this based on vehicle CO2 emissions, and so should generate an
increased trend in fleets operating more efficient vehicles.” This
will bring the added benefit of tax reductions, he adds, “while
some clarification is needed on the legislation, it is clear that
if you are operating the majority of vehicles in your fleet under
160g/km CO2 you will benefit from a reduction in both running costs
and tax”.
Peace talks of the recently developed four-step environmental fleet
management plan for fleets of 100 vehicles or more. “This straight
forward process – review, recommend, reduce, re-evaluate – enables
fleet managers to identify the most effective way of reducing the
environmental impact of their fleet. We are currently developing a
facility to allow drivers to choose to offset the carbon emissions
of their chosen vehicle over its contract life as part of their
monthly rental.”
Business intelligence
Management reporting is key to fleet management, says Peace. “Yes,
we recognise reporting is at the heart of fleet management. We are
always looking for ways to offer improvements in this area, and
have developed a business intelligence dashboard that will give
fleet managers a single view of all the information required to run
their fleet.”
This enables fleet managers to identify areas of concern and
suggest a course of action says Peace. “This will keep them in
control at the click of a mouse, or the touch of a button.”
Hitachi is also looking to streamline its booking process, making
it simpler for customers to use online. “This is a priority for our
daily rental services. The system has to be quick and easy to use,
and the aim is a paperless process from quote through to vehicle
order and ‘in life’ services.”
Solutions
Hitachi Capital has a strong presence in the utility and government
sectors. “We have long standing relationships with Centrica, Wales
and West Utilities, Southern Water and Tower Hamlets, for example,”
says Peace. “These fleets require sophisticated and sometimes
complex solutions. We use KPMG’s CarWISE fleet software to
independently evaluate the most appropriate funding method for the
customer, including contract hire, contract purchase, finance lease
arrangements and structured employee car ownership scheme.
“We also operate a sale and leaseback service, which we’re seeing
more interest in. This is not unsurprising, given the impact of the
credit crunch on an organisation’s ability to obtain funding – this
being a highly effective way of releasing capital.”
Challenging landscape
As for the future of the industry, Peace believes a number of
challenges lie ahead. “I think the issue of liquidity and
availability of funds will challenge organisations affected by the
sub-prime fallout over the next two to three years, while the
changes in Corporation Tax allowances and Vehicle Excise Duty will
see the make-up of individual fleets change.
“On the green front, and with high penalties for the most polluting
vehicles, we can expect to see a continued trend towards more
environmentally friendly ones, which means fleet managers will see
reductions in tax and running costs.”
And what is Peace driving at the moment? “Well, I’m lucky, I get to
choose from a large pool, so have driven BMWs, Audis, Mazdas and
the like. At the moment though I’m in a Mini – a cracking little
car.” That makes a lot of sense.
