Electrification and mobility hold fleet opportunities despite supply crisis, report claims
04 November 2021
Author: Sean Keywood
Fleets should take advantage of opportunities being offered by electrification and new mobility options, despite challenges currently being presented by car supply issues.
That's according to automotive services firm Cox Automotive and accounting company Grant Thornton which have together published their fourth annual Automotive Insight Report.
Based on data taken from the UK and around the world, the report highlights how demand for electric and hybrid vehicles is increasing, with a significant step forward for EV market share during the past 12 months - and fleets having relatively little time to react ahead of the UK Government's 2030 ban on new ICE cars.
Grant Thornton head of downstream automotive Owen Edwards said: "Most global vehicle manufacturers have indicated they will stop making or selling ICE vehicles between now and 2050. Many have already begun that process, and there are now around 370 electric car models available, a significant increase from pre-pandemic.
"Consolidation and vertical integration are producing economies of scale on production lines, as well as collaborative technology development around the raw materials, powertrain, and charging infrastructure.
"For fleets, there are just one or two change cycles remaining to make the transition to electric."
On the subject of shared mobility, the report notes that this has come under pressure during the Covid-19 pandemic due to the need for social distancing and related safety measures, however it predicts short term leasing and subscription products are likely to make a significant impact on the shape of the market in the years to come.
For the fleet sector, it says this means a change in the way the relationships with the manufacturer and the driver are managed, as well as opportunities to explore new revenue streams and complementary aftermarket services.
In addition, the report states that with vehicles potentially moving between drivers more frequently, there will be a much wider range of age and time cycles in the market, rather than the more traditional sub-12 month or three-year replacement phases. It argues fleets and rental companies will need to consider how best to maximise vehicle utilisation and monetisation.
The report also considers the supply issues currently hitting the new, and as a knock-on effect, the used car markets.
The report states: "Many of the world's best-known manufacturers have lead times of 12 to 18 months on some of their new vehicles because of the pandemic backlog of fulfilling orders combined with materials shortages.
"There are now more than 1,000 microchips required in each new vehicle, and it is only getting more complex. But factories have been closed over the past 18 months due to Covid-19, the raw materials to manufacture chips are in short supply, automotive chips are different from those in other industries, and the automotive industry does not have the dominance of demand."
The report adds that while some manufacturers have tentatively trialled making and shipping vehicles with the option to retrofit less essential microchips later, such as infotainment and navigation systems and duplicate keys, this is unlikely to prove satisfactory.
It states: "Current customers won't receive what they have paid for, and there could be real challenges when it comes to setting residual values and remarketing these vehicles if the reality doesn't match up to the guide descriptions because the retrofit didn't take place."