The paradox of choice
18 August 2017
Author: Rachel Boagey
Manufacturers have diversified their product ranges so much over the years that even cars that would have never been considered suitable for fleets are now meeting their user-chooser criteria.
Certainly, some of these vehicles are in demand by company car drivers and choice lists have evolved to include them.
Whereas creating a tailored vehicle-choice list used to give a fleet manager the opportunity to drive cost or efficiency ambitions, now, there are so many cars that meet these targets, meaning the lists have effectively been blown wide open, leaving many to question how fleets are supposed to organise these choice lists at all.
Not a one-size-fits all approach
Craig Grant, head of account management at Alphabet, tells BusinessCar that with the number of new model variants entering every segment of the market, offering different body styles and powertrains, "there cannot be any overall general trend for user-chooser lists now, simply because the needs of each fleet are different".
In fact, Grant believes that the fleet is now a strategic as much as operational consideration and a 'one-size-fits-all' approach just doesn't work anymore.
So where can fleets start with organising their lists? Chevin managing director Ashley Sowerby explains that the lists, generally speaking, do tend to include a variety of vehicle makes and models; however, it is not unheard of that an organisation will favour one particular manufacturer to make things less complicated.
That's exactly how Lex Autolease operates. Paul Coley, principal consultant, says that although the company has seen a vast number of models come onto the market in the past few years, this hasn't automatically led to an expansion in vehicle-choice lists. "Rather than offer a completely open choice policy, standard protocol is to continually review employee preferences and keep a core list of approximately 10-12 manufacturers that fit within the financial entitlement parameters of the fleet policy," he explains.
However, Chevin's list includes approximately 150 different vehicles, from a number of different manufacturers, across all diesel, petrol, hybrid and electric fuel types. Sowerby continues, "Each vehicle listed falls within a specific CO2 bracket, which is lowering year on year and, as long as the vehicle is practical for day-to-day use, each user has free reign over vehicle choice."
Diesel, petrol, other?
While CO2 output and price are still important factors in the fleet-choice lists, the difference from, perhaps, a decade ago, says Grant, is that many more fleets are looking at whole-life cost models to help construct their choice lists, meaning greater choice for drivers.
"This makes available some models or marques that previously may have been unavailable or perceived as 'expensive' purely on a list price basis."
Coley explains that five years ago, company car choice lists would have been exclusively diesel or petrol but, with new petrol hybrids and electric models coming onto the market, the landscape has started to shift. "The UK Government's commitment to have only zero-emission car and van sales by 2040 has set a target for the industry to meet. This will help to achieve low-emission strategies, which will support a number of business objectives and keep costs down for employees."
Liam Cresswell, consultant at Arval, keeps an eye on these changes, saying there are some developments around newer powertrain technologies, such as plug-in and electric vehicles, that should be noted. "Where plug-in vehicles are concerned, companies may have to adapt policies to suit their operational use, especially around reimbursement of business mileage," he points out.
However, Grant believes that less traditional company car marques such as Seat and Kia are pushing the more conventional fleet choices, making it harder for managers to stay up to date and analyse the sheer breadth of choice available.
"CO2 and price - both list and monthly contribution - continue to be pivotal factors when constructing a vehicle-selection list," he says. "Where it was previously standard policy to only include diesel-run vehicles, companies are now revisiting other fuel types on the condition that they fall within specified CO2 limits."
While diesel remains the prevailing choice for the majority of fleets, as it has long been the most cost-effective fuel type, Cresswell says that in recent years, advancements in petrol, hybrid and plug-in hybrid technology have caught the attention of more fleets, and Arval
is starting to see a diversification of some policies, "although this is a process that we expect will take some years across
Coley highlights that he is looking forward to seeing how the market reacts to the UK Government's target of zero-emission new car and van sales by 2040, but it's clear that the overall commitment to lower vehicle emissions will result in a transition towards ULEVs over the next five to ten years. "We expect future vehicle-choice lists to become more specific to individual needs, as opposed to offering generic models. For example, a Euro6 diesel may still be the right vehicle for an employee doing 30,000 business miles a year, but for an employee only doing a few thousand miles, businesses should be considering a petrol hybrid or electric car."
Deciphering want from need
Company cars are as much a part of an employee's remuneration and benefits package as they are a business tool to get from A to B, and, we are now seeing the technology in vehicles playing an increasingly important part of a user-chooser's decision process, according
"Ultimately, though," Grant explains, "the cost to the business, practicality to meet drivers' work needs, as well as desirability for employees - in terms of badge, spec, efficiency and emissions - are still the 'holy trinity' for senior fleet decision-makers when devising their user-chooser lists."
In terms of driver influence on the list, Sowerby notes that it depends firstly on the purpose of the company car. "If the employee in question is receiving the vehicle as a benefit or perk, then the list - and the decision process - is likely to have greater flexibility. Company positioning with regard to seniority will also increase the level of user influence.
"If, on the other hand, the vehicle is being given to an employee to serve a business function, then it is highly likely that the company will be more restrictive when it comes to employee input in order to maintain control."
Grant believes that constructing user-chooser lists requires input from key stakeholders in the decision from across the business. "With larger businesses, we also engage with employee representative bodies, such as staff councils or employee reps, which helps to get a different view on the issue," he says. "In more forward-thinking, progressive companies, user-choosers from across various grades of their employee car population take part in the process as stakeholders. By seeing and experiencing a range of makes, models and specs 'in the metal', they have helped shape the final list selection by identifying those that have the best practical fit and the most appeal."
The user-chooser lives on
As technology improves and new powertrains reach mass adoption, companies will want to offer employees a broad choice to ensure driver satisfaction, and that company car policies feature as many cost-effective and desirable vehicles as possible. This can't be achieved through restricting driver choice and ending a user-chooser policy, according to Cresswell.
Therefore, instead of getting rid of the list completely, he believes companies are likely to continue with a user-chooser policy and may diversify choice lists by allowing drivers to select vehicles from manufacturers that are at the forefront of technological advancements, while lifting some of their current restrictions on fuel type and CO2 to enable selections from other powertrains, such as petrol, hybrid and different types of plug-in vehicles.
Grant believes that a user-chooser list is still important as it's one of the key levers of a fleet's mobility strategy - along with fleet policy. "It helps give employees greater choice through combined buying power, and helps to reward the right decisions in terms of emissions and fuel economy," he says.
"The desirability of vehicles on the list is important for employee reward and motivation, but the list is also crucial for rewarding responsible behaviour from employees when it comes to the environment and company resources."
On the whole, all parties agree that user-chooser lists are still integral to a business's reward strategy, now and in the future. However, Coley believes that a sensible option for some companies that wish to simplify their reward strategy is to keep a streamlined list of manufacturers, which provides staff with cars and vans that appeal to their needs while keeping costs down. "This is a strategy for controlling the lists that everyone can adopt," he concludes.