VW Financial Services: flexible fleet management - the freedom to change
In an age where companies need to respond quickly to market opportunities and adapt to a new mobility paradigm, it is essential to have flexibility in fleet management operations. VW Financial Services aims to provide that flexibility. FDE spoke to Fer Derwort, European fleet manager for Infor, about how its needs are changing and how its leasing partner can adapt.
Fleet managers are steadily moving away from the traditional model of company car leasing. While many have not yet made dramatic changes to the composition of their fleets, they are nonetheless preparing for change. To help them with this, they require suppliers that not only incorporate flexibility into their leasing arrangements, but also understand the need for long-term relationships with their clients.
"My role is to manage the European fleet for Infor, and that still consists mainly of company cars with a traditional combustion engine and a mixture of fuel types between petrol and diesel," says Fer Derwort, European fleet manager for Infor. "We were looking for a company car solution that would not only be flexible, but which was also provided by a single lease provider in Europe with which we could build a long-term relationship."
With a large workforce working in diverse markets around the world, the demands on its fleet management capability are great, but in Europe it has solved many potential problems through its partnership with VW Financial Services.
The company, a 100%-owned subsidiary of Volkswagen, is the biggest automotive lease provider in Europe and is responsible for coordinating the worldwide financial services activities of the Volkswagen Group.
In 2009, at the height of the global financial crisis, Infor began a programme of fleet replacement. The timing meant that some potential leasing partners found it difficult to meet the company's needs, but VW Financial Services was able to step up to the plate.
"From that year onwards, we had a new car scheme across Europe," explains Derwort. "We looked at other European lease vendors, but they could not meet our needs. We have built up a large fleet of around 1,350 vehicles in Europe, but back then the financial crisis was a big problem, making it much harder for the big companies to get the right funding. VW Financial Services, on the other hand, could do the finance part."
A new model for mobility
Next year, Infor will renew a large proportion of its fleet in Europe, the majority of which are VW models, although at the top end many are of the Audi brand, which is owned by Volkswagen. The replacement process will be handled through Infor's existing relationship with VW Financial Services, which Derwort believes offers his company a great many advantages.
"It gives us the flexibility that we need across Europe through its network of partners," he explains. "We are very satisfied with how the relationship has worked out so far, and that is one of the most important aspects. The basic relationship is very good and VW Financial Services works hard to give us flexibility in the general agreement we have with them, and it also makes sure that its lease rates are competitive.
"I would say they certainly give us a lot more flexibility than their competitors do. Price is important, too, and we are total cost of ownership (TCO)-driven at Infor. We have definitely made a cost saving with our fleet, so it is a benefit that we have reduced our spend," he adds.
Scale is an important factor, too. VW Financial Services is the largest automobile financial services provider in Europe. At the end of June 2013, its total assets had reached more than €87.6 billion. The company currently has around 9,000 employees around the world, over half of whom are situated in Germany.
The scale and the financial backing that its leasing partner brings to the table will be important for Infor as its takes its TCO model of fleet management forward into the next paradigm. One of the determining factors of that paradigm is sustainability, which prompts many people to immediately think of bringing more electric cars of hybrid vehicles into the fleet, but Derwort believes that the matter is not as simple as that.
"Carbon emissions are important to us, and we are following the development of electric cars and hybrids very closely, but we do not have any in our fleet at the moment," he explains. "One of the reasons for this is that government incentives to use electric vehicles are prone to change every year. In the Netherlands, for example, there are currently incentives to purchase electric vehicles of hybrids, but we might see the market price double the following year.
"Another reason is that, in some countries where we operate, there is simply not the infrastructure to support electric vehicles. Even when the infrastructure is there, we only see electric vehicles as a good solution if you do a lot of travelling within a city. Outside the city, when a lot of travel is required, they do not have the right capacity, so that is why electric vehicles and hybrids have not been selected for our fleet," he adds.
Holistic fleet management
For Derwort, the future is not just about sustainability. Instead, it is about taking a more holistic view of mobility, which means that attitudes towards company cars will no doubt change a great deal.
"The future will see a big change in our fleet requirements," he says. "The future will be all about the move to mobility management, of which the fleet will be just one part. In many areas of Europe, traffic jams are a big problem, and we are also seeing that cars are not as important to young people as they are to older generations. There is also a move towards home offices and the use of remote collaboration technologies like videoconferencing.
"Mobility will mean looking more at public transport options and finding solutions that meet the changing needs of employees," he continues. "Our policy is that the company car is for business purposes, but it can also be used for personal needs. That represents a subtle shift from the idea of ownership to the concept of use."
The shift Derwort describes represents a trend for European countries to become more like Nordic nations, where cars are used less. Such a change could pose big problems for leasing companies as their customers adapt to a model in which fleet management and company cars are just one piece of a much bigger puzzle that includes different modes of transport, including public transport services.
"VW Financial Services is a good partner in that it is able to adapt to our mobility model as it develops," says Derwort. "That is important, because the move from ownership to use is one that our staff have reacted to positively. It is important that leasing companies change their profit model. They have to adapt, and those that do will conquer the market."
VW Financial Services is one partner that is ready to adapt its model, and from his experience of working with the company over the last five years, Derwort believes that it puts the needs of its customers first.
"It is all about a relationship," he says. "It can develop with its customers because it is all about trust and the ability to change as its customers' needs change."