ARI: A truly global fleet management service

Globalisation is forcing fleet managers to centralise operations and look at new ways of collaborating with competitors. Rob Hill of ARI discusses the shift from competition to coopetition between rival vehicle providers, and the future demand in China and India for fleet management services.

Could you briefly introduce yourself and your company?
Rob Hill: I'm the director of global consulting for ARI, a privately held fleet management company with more than 65 years of experience, currently managing 950,000 vehicles in North America and the UK, and, together with our global partners, nearly two million worldwide. We primarily operate in North America, though we do have a growing presence in the UK. We also have partners in Africa, Asia and Latin America, and multiple suppliers for our European clients.

How has fleet management changed over your 17-year career?
One of the biggest changes I've noticed is that European and North American-based global companies are moving away from having fleet specialists in individual countries. Ten years ago, they'd have had a fleet manager in Brazil, one in Australia, another in South Africa, and so on. But now a lot of these positions are disappearing; the key decision-makers are being centralised. It means that people who are now taking care of fleet management on a local basis don't have the same level of expertise - they can't derive things like total cost of ownership, for example. Another key trend is the way globalisation is impacting the relationships between rival fleet companies. There are still no truly global fleet organisations; the largest is Lease Plan, and that operates in fewer than 40 countries. Consequently, a fleet decision-maker can't simply say, 'I'd like product X in every country we operate in.' But now, fleet management companies have started to cooperate and collaborate where necessary, while still competing in other areas. They've realised it's the only way to provide a truly global service.

Is that something you envisage becoming more popular?
Yes, though slowly. It's also something ARI has become increasingly involved with. When we started our global reporting service ten years ago, it was based on customers using either us or our partners. But we soon realised customers would often go to rival companies in different countries. So we had to become more flexible and take on data from our competitors, otherwise our reporting service would not have been global.

How do you think the Basel reforms will impact fleet management?
A number of major leasing companies in Europe are owned by banks, and the capital requirements imposed by the Basel agreements are affecting them. It's certainly possible banks will start moving away from lease funding, so there's an open question of where the financing will come from if that happens. However, I'm not sure it's as worrying as some people are making out. There's also a great deal of negativity surrounding the potential impact of the International Financial Reporting Standards reforms, but I don't think they're going to have much of an effect. Essentially, these are both things that might affect the way fleet services are delivered, but the underlying need for vehicles isn't going to go away.

So what is going to impact the sector?
The big question everyone's asking themselves is what's going to happen in China over the next few years. At the moment, it's much more of a mobility market - the average sales rep doesn't have a company car; they get around in taxis and trains - but when that shifts, and in my opinion it soon will, it'll have a tremendous impact on the global fleet business.
The same goes for India. The middle classes are expanding at a phenomenal rate in these developing nations, and the fleet market will no doubt grow in tandem with them. It will probably also shrink in Europe and North America.

How will environmental concerns be met by these developing nations?
It's true that China doesn't really have CO2 rules at the moment, but I think that will soon change. The new Chinese premier, Li Keqiang, has already said he's unhappy with the amount of pollution in Beijing, and the government has started to acknowledge it's a serious public health problem, rather than just batting the issue aside. When fleet does begin to take off there, the cars will probably become smaller to accommodate these concerns.

Director of global consulting Rob Hill.