Volkswagen Financial Services: World in motion - Knut Krösche

As companies continue expanding into new markets, ensuring employees worldwide travel safely and efficiently from A to B has never been so important. Managing mobility on an international scale is vital to monitor cost, sustainability and performance, but knowledge of local markets and access to data on the ground remains vital. Finance Director Europe speaks to Knut Krösche, Volkswagen Financial Services' head of international fleet.

How have Volkswagen's global capabilities evolved since you last spoke to Finance Director Europe?

Knut Krösche: In the last couple of years, fleet projects have been in Australia, Ireland, South Africa, Mexico and Portugal. The company's international reporting systems now cover 40 countries worldwide, and a new international quotation tool has been implemented in Poland, Switzerland and Germany, which will follow in the Czech Republic, Spain, the Netherlands, Sweden, Italy and the UK later this year.

The international fleet can now accompany customers on a truly worldwide level, managed through one global contact partner here, in my department.

A company can be headquartered in Europe, but have some cars in South Africa or Brazil, and it's really important that Volkswagen covers these, because transparency is key to the fleet. Certain countries tend to do their own thing, specific to their location and it helps to have access to that.

One major recent development is that Volkswagen is now the leading provider of operational leases in China, with more than 15 locations.

China must be very different to Europe from a fleet perspective; what have been the challenges in making inroads there?

China is definitely very special. People think that, because it's such a big country with so many cars, the fleet business is also very big, but that's actually not the case yet. It's still a new car-purchase market, and not that centrally ruled. Every region has its own licensing system, so number plates are a big problem: they are created almost like goods, and getting more and more expensive. There are already 'restricted' towns, where only a limited number of plates are left. In Beijing, there are just 500,000 more new-car registration plates to come, and then you will only be able to register pure electric vehicles.

Many people still go by bus, train, plane or even taxi to visit their customers. For example, Volkswagen has a European customer with 6,000 employees in China, but only 300 cars. While it's not a big fleet market, the client is looking for full-service products, so the few cars you can register need to offer all the same services in Europe, often with a need for a driver. You need to find a capable, reliable driver who can speak English with foreign passengers, and make sure he arrives at the right place, at the right time, with a suitable car.

How can working with one partner internationally help customers?

For companies with a reliable supplier in Europe, it's obviously an advantage if this partner can accompany them into other countries, because they already know the processes and the systems involved, and have a trusted relationship with them.

With Volkswagen Financial Services, they also benefit from transparency, because with its expansive reporting system enables it to report, not only on its own cars, but also on any OEM and leasing companies. As long as the customers provide the legacy cars, Volkswagen can report on the whole fleet, globally.

That must give you a huge amount of data. How do you manage it efficiently?

There's a saying, 'less is more'. There are some key performance indicators (KPIs) that every fleet manager needs to know. For example, the number of cars, leasing companies and manufacturers; the petrol vs diesel fuel share, CO2, TCO and contract monitoring. These put you more or less in control of your fleet.

Volkswagen provides interactive maps, where you can click on a country, look on the dashboard and see the fuel share, or you go to the car data and call the local fleet manager to ask why these cars are still driving petrol instead of diesel.

A top-down report is provided, because an international fleet manager hasn't the time to decide whether the 1.6 engine in a Golf in May-August 2014 in France was worth the fuel consumption, but wants to drill down from the overall view.

If, for example, the dashboard is green-lit, it shows that, on a global level, everything is generally fine; if red or amber lights then show in Asia, the local issue can be identified and followed up with colleagues there.

The manager can also pull a report for the CFO within 15-20 minutes, and export it to PowerPoint or PDF, saving time, workload and allowing key tasks to be focused upon.

How can these tools help you to manage efficiency in terms of driver behaviour, sustainability and global footprint?

What I've just described is an 'ex-post view', whereby you see past activity and CO2 footprint, which is really important, but Volkswagen is currently working on a 'what-if' analysis tool that helps show fleet managers how changing policy would affect the fleet.

Rather than provide solutions to problems customers do not have, the aim is to understand their philosophies and goals, and decide how the data can be used to help achieve these targets. For that, the 'what-if' is considered, as well as the past. This also helps customers focus on their KPIs.

How do KPIs vary between regions?

Not as much as some people would tell you. Local businesses tend to think they are unique, but an 80:20 approach usually fits best for fleet, where 80% is common, and 20% is local.

I never talk about 'standardisation' with regards to fleet, because there is not a 100% similarity, but rather 'harmonisation', because this is possible and beneficial. Of course, there are still different approaches, for example, in the US market, there is more finance lease, with the residual value risk on the customer's side.

It's also a cultural thing, and so every new employee receives intercultural training in order to help them understand how the roads, people, climate and demands differ from between countries. For example, in the US, you generally have functional fleets, with company cars reserved for top management.

In Europe, it's common to have benefit cars that are almost part of the salary package, rather than just for business use. Australia, although it's far away, is quite similar to this far-developed European fleet market, whereas India requires a very different approach, with small, cheap cars.

There are also geographical differences to take into consideration. If you have a car in a big country like Russia, you could easily drive 300km to reach a dealership for a service, and when you reach your house, it's almost time for another service.

In Germany or the Netherlands, on the other hand, the high dealer network intensity means that one is always guaranteed to be close by.

Within this 80:20 model, what are the common elements?

The common factors are that fleet cars must be serviced - they are 'working tools' so they need servicing, inspecting - far more than with retail customers. Fleets are TCO-driven, and you probably need cost-development products too. You need tyres, you need insurance, accident claim management - there might be local differences in terms of tax or regulations, but in general they are common.

Then there are environmental consciousness and sustainability programmes, so that means taking care of CO2. And across the board you need transparency of reporting and smooth, optimised processes, whether it's ordering a car or accessing information.

How is the idea of 'mobility management' affecting the industry?

People are moving from being fleet and car managers, to mobility managers. The talk now tends to be about 'total cost of mobility', so it's moving from TCO to TCM. At this stage, it's still being discussed more than it is actually happening, but it is clear that in future there will be different ways to keep people mobile.

The car remains core, but there will be more variation around payment terms and more flexibility; so an employee may have a car, but also book planes and trains. He or she might change company car for different periods of the year, so that in summertime it's combis for work, and cabriolets for holidays.

Volkswagen makes a detailed profile of the driver as a 'user-chooser', and uses this to look at the total mobility needs of the fleet, and to instruct the company that a certain group is best suited to leasing cars, or renting, or using B2B car sharing. This capability is currently being piloted in some countries.

Whereas in the past factors like deviations and fuel consumption could only be analysed retrospectively, it will soon be possible to monitor them in real time, and potentially influence and support the driver's behaviour to save fuel and increase security.

Knut Krösche, Volkswagen Financial Services’ head of international fleet.