Fleet optimisation in developing countries – best practices that deliver
We are often asked by our clients: which fleet management approach is the best for fleet in developing markets? Most times, based on our experience, we can say there is no ‘one size fits all’ solution. Yes, standardisation and harmonisation are possible to some extent, but we’ve found that it’s essential to keep in mind that every country or region has its own dynamics, driven by cultural differences, tax regimes and political forces.
The 3 fleet challenges in developing countries
We’ve identified three key challenges faced by fleet in developing countries. Considering them can help optimise local operations by better understanding specific countries wants and needs.
1. Fleet management model – clients’ approach to fleet management comes in all shapes and sizes – while some might already have a central approach with regards to fleet management, others might have limited (central) visibility of specific markets. However, our experience is that a ‘one size fits all approach’ for all countries in the developing world rarely brings the sought-after benefits.
2. Availability of vehicles of choice – Vehicle suppliers operate differently across regions and countries: in line with the legislation, infrastructure and fiscal regime of the country. In addition, trade barriers influence the availability and price of vehicles in local markets. And last, but not least, local brand preferences differ per country.
3. Mobility schemes – Not only are driver preferences not the same across the regions, but the eligibility of a company car also depends on the availability of resources. So, whereas in developed countries we see a preference for company car schemes, in the developing countries alternatives such as car loan or transport allowance are popular mobility solutions.
Practical bite-sized steps that deliver
Does this mean an international approach for developing countries is a no-go? Definitely not! There are many ways in which best practices can help to achieve lower costs, reduce your carbon footprint and increase driver satisfaction in developing countries also. The secret seems to be to take it a step at a time. We’ve seen companies successfully maximise fleet revenues in these countries by breaking down best practices into practical, bite-sized steps. Here are five such steps:
Improve driver safety
Driving styles may vary widely across regions, but being clear about what you consider safe driving and safe vehicles is a proven way to cut back on related costs. Provide guidelines and instructions to all drivers, for instance, in a driver handbook that defines best driver behaviour. In-car safety options can be made mandatory across all regions. Air bags, anti-lock breaking system (ABS) and electronic stability control (ESP) are available worldwide. Making such safety attributes mandatory in new cars will significantly increase driver safety.
Cut back on CO2 emissions
With data regarding CO2 emissions not always standardized and available in developing countries, applying CO2 thresholds is hardly effective. It’s better to influence car allocation and selection. With requirements varying per country, be sure to collaborate with your local offices to select fit-for-purpose, best-in-class vehicles with the fuel economy you’re looking for.
Cut back on costs
The most obvious way to cut back on costs is to steer local car policy from a central approach. But, local policies have often been in place for many years already and will be hard fought. You could start by taking out those things that are not supported by your company strategy. Be sure, though, to also watch out for local and cultural sensitivities. Whatever you choose to do, make sure your proposed changes are backed by facts, based on benchmarks. And don’t forget to involve the right stakeholders if you want to successfully do away with non-cost effective car policy elements.
Opt for the best mobility scheme
Operational lease is the leasing option of choice in the developed countries. Less so in developing countries where we see many companies offering their drivers a car allowance or car loan. This choice is often from habit rather than from an economic choice. So why not point out the following benefits of a company car scheme above the allowance model?
• Improved cost control (more flexibility than with fixed payments of the allowance)
• Control and compliancy over suppliers (select preferred partners)
• Less price sensitivity for drivers (rises in fuel and insurance prices are paid by the drivers in case of an allowance)
• Improved safety and environmental standards (standards are set by the company car policy)
Reviewing local policies
We’ve noticed that companies, that have been most successful in getting local operations to comply with corporate policy, are those who have taken the effort to review mobility schemes in close collaboration with the countries. Based on relevant benchmarks, but keeping in mind local idiosyncrasies, you too can review the supplier market and analyse the fiscal, political and environmental factors in the markets. A financial business case will help support your case.
Remember though, at the end of the day, improving fleet management takes time. And building towards company-wide benefits starts with involvement and understanding the specific dynamics of your local operations. Create that involvement and you’ll be rewarded with lower costs, higher driver satisfaction and a smaller carbon footprint in developing countries also.